Tyres Industry
| |
Budget Measures
|
| |
There are no specific announcements for the tyre industry.
|
| |
Removal of customs duty surcharge of 10%.
|
| |
Budget Impact
|
| |
The reduction of customs duty surcharge by 10% will benefit those tyre manufacturers who import rubber and carbon black feed stocks. However it will negatively impact tyre companies who are facing stiff competition from cheaper imports from China, as the removal of surcharge will encourage them more.
|
| |
Industry wish list
|
| |
As imports of tyres are a threat to the growth of the industry, a hike in customs duties from 38.5% currently would be a welcome measure. As Chinese tyre manufacturers are flooding the market, this will be a welcome measure.
|
| |
Elimination of Import duty on key Raw Materials such as Polyester Tyre Cord Fabric, Steel Tyre Cord Fabric and Butyl Rubber—On the grounds that there is no domestic production of these items.
|
| |
Import of second hand tyres needs to be restricted by fiscal and physical checks.
|
| |
Tyres suffer from a high incidence of excise duty. Considering that various committees appointed by the Government have recommended reduction, a reduction in the rate of excise duty would be very welcome.
|
|
| |
| |
Key Positives |
| |
Since the liberalisation of the early 90's, the tyre industry has seen demand rise as the automobile sector has grown tremendously in terms of market size and production capacities.
|
| |
As second hand car market has picked up, this will lead to higher demand from tyre manufacturers as replacement demand rises.
|
| |
Higher competition in the automobile segment will result in an increase in the number of new models. This will increase demand for tyres in the OEM market.
|
|
|
| |
Key Negatives |
| |
The automobile sector has reported a sharp decline in volumes in FY01 due to uniform sales tax rate, drought conditions and lower freight demand. This has resulted in lower demand for tyres.
|
| |
Tyre companies are saddled with pressure on operating margins as the prices of rubber and carbon black; two important raw materials have been increasing.
|
| |
Threat of cheaper imports from Chinese tyre companies is looming over the industry.
|
|
| |
