KOCHI: The tire industry has said that the RTAs in India have negatively impacted its business due to limited raw material imports and a large number of tires entering the country as a direct result of these agreements. The basic tariff on tires is 10%, but under various trade agreements, the tariff on tires can increase from 0% to 8.6%, increasing tire imports into India.

However, the Automotive Tyre Manufacturers Association (ATMA) said in the Finance Ministry’s budget memorandum that the inclusion of natural rubber in the negative list (there is no tariff relief in most trade agreements) has had a two-way impact on the tire industry.

Under the ASEAN Free Trade Agreement (AFTA), India-Sri Lanka, India-Singapore or India-Malaysia Trade Agreements, natural rubber is included in the negative list, which means there is no tariff relief. On the other hand, India-Sri Lanka and India-Singapore can import tires duty free, while ASEAN FTA can be exempted from 6% duty and APTA can be exempted from 8.6% duty.

Despite low import tariffs, ample domestic capacity and huge investments, India has been encouraging a massive increase in tire imports. Therefore, in an inevitable scenario, the Indian government is likely to increase the tariff on tires from the existing 10% to a higher level. Raghupatitia Vice President Ragh “Since there is no tariff limit on tires, tariffs can be imposed without violating WTO rules.”