Government reduces import duty on natural rubber to 7.5 per cent

This year has witnessed an increment in the price of natural rubber and as a result the tyre manufacturers were forced to import natural rubber. The exports resulted in increasing prices of tyres by the tyre companies due to heavy import duty levied on the shipping of the natural rubber. But now the Indian Government has reduced the import duty to 7.5 per cent from the prevailing 20 per cent. The trimming of the import duty will help in raising and balancing the supply of the raw material in the Indian auto market.

As per Rajiv Budhraja, the Director of the Automotive Tyre Manufacturer's Association (ATMA), the association appreciates the Indian government's initiative which was long due and it was known that the situation was getting worse due to the sudden hike of the prices of the natural rubber. Currently, witnessing the price hike and availability, the reduction in import duty would help the tyre company.

As per the reports, the Indian government on Thursday announced that its is decreasing the import duty on natural rubber from 20 per cent to 7.5 per cent on a shipping of 40,000 tonnes effective till 31st March 2011. It will greatly help to raise the supply of rubber in the domestic auto market and also will keep an eye on the increasing prices that raised to Rs 207 a kg in this year. After 31st March, 2011, the government will levy the import duty on 20 per kg or 20 per cent whichever is less.

As a result of the price hike in the natural rubber, the Indian tyre manufacturers have also raised the price on its products. Ceat has announced a hike of 1 to 2 per cent in its products whereas JK Tyres and Industries has raised the price of its tyres to four to five per cent. The industry experts are of the opinion that the prices should be increased gradually rather than shooting it up to a big number since the sudden price rise will result in a huge burden on the manufacturers as well as consumers. The import tax reduction might help in catering to the needs of the Indian auto market and ease out the hike being experienced currently.

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