In its pre-budget submission to the Finance Ministry, Tyre Industry has asked for urgent measures to curb the burgeoning import of waste tyres in India.
According to the Automotive Tyre Manufacturers’ Association (ATMA), the import of waste/scrap tyres into India has increased by more than five times since FY20-21. Such indiscriminate import of waste/scrap tyres is not only an environmental and Safety concern but also undermines the very purpose of Extended Producers Responsibility (EPR) Regulation on Waste Tyres (in place w.e.f Jul 2022).
“India has emerged as one of the leading manufacturers of tyres in the world with domestic manufacturing of tyres surpassing 200 million Tyres per annum. Accordingly, there is enough domestic End of Life Tyre (ELT) capacity available in the country. The import of waste/scrap Tyres into India needs to be restricted through policy measures and, if necessary, allowed only in multiple cut or shredded form”, said Arnab Banerjee, Chairman ATMA.
India is on its way to becoming a ‘dumping ground’ of waste/scrap Tyres. In FY24 alone, nearly 14 lakh metric tonnes of waste tyres were imported in the country. These tyres are either resold in the replacement market resulting in unsafe travel or burnt causing environmental degradation.
In its wish list, ATMA has also asked for duty free imports of natural rubber (NR) to the extent of domestic demand-supply gap in the country. Nearly 40% of Tyre Industry’s NR requirement is met by imports on account of non-availability of domestically manufactured NR. The highest rate of duty on import of NR in India impacts the competitiveness of the industry.
According to ATMA, restrictive provisions on NR further add to the woes of the industry. Port restrictions w.r.t import of NR need to be removed with immediate effect (import of NR is allowed via. only two ports, viz., Chennai and Nava Sheva).
Additionally, the pre-import condition on NR import against tyre export obligations needs to be removed as it constrains operations.
The issue of Inverted Duty Structure (Tyre versus its key raw material, Natural Rubber) needs to be addressed on priority. While basic customs duty on tyres is 10-15%, under Free Trade Agreements (FTAs), tyres are imported into the country at even lower duties (preferential duties) while the basic customs duty on its principal raw material, i.e., natural rubber (NR), is much higher (@ 25% or Rs 30/kg, whichever is lower).
Also, a GST rate reduction on key raw materials of Tyre Industry will help improve economies of scale in the sector, support value addition in the domestic Tyre Industry and make Indian Tyre exports more competitive globally, states ATMA.