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Tyre supplied to replacement market — Panel urges Govt to peg duty at 16%

K.R. Srivats

If this panel recommendation were to be accepted by the Government, truck owners could be a key beneficiary of such a reduction.

New Delhi , Aug. 25

THE Rs 12,300-crore tyre industry may have a reason for cheer. A department-related Parliamentary Standing Committee on Industry has urged the Government to consider an immediate reduction in the excise duty on tyres supplied to the replacement market from 24 per cent to 16 per cent.

The Government had in the Budget reduced the excise duty for tyres supplied to the replacement market from 32 per cent to 24 per cent. The tax contribution of the tyre industry in a year is about Rs 3,500 crore.

If this recommendation of the Parliamentary Standing Committee, Chaired by Dr P.C. Alexander, were to be accepted by the Government, a single truck owner could be a key beneficiary of such a reduction. On an average, a truck operator changes one set of tyres (i.e. six tyres) every six months (i.e. 12 tyres a year). At 24 per cent, the excise duty forked out for each truck tyre in the replacement segment works out to about Rs 1,500 per tyre. This implies that a single truck operator pays Rs 18,000 as excise duty in a year.

"The ultimate burden of heavy taxes and duties on tyres has to be borne by the consumer. Truck operations are akin to small scale/tiny industrial unit operation on which no (or very marginal) tax is levied. Viewed from this angle, road transport industry should also get similar treatment from the Government," according to a report submitted to the Parliament by the Standing Committee.

The Standing Committee report, which is on the provisions and prospects of auto policy announced by the Government, has highlighted the high tax content on the tyres. "The high tax content on tyres can be gauged from the fact that the percentage of total tax to the tax excluded price for various categories of tyres is — 44 per cent for truck tyres, 41 per cent for passenger car radial tyre, 35 per cent for tractor rear tyre and 76 per cent for tractor tyre tube," the report said.

The committee has also recommended waiver or reduction of customs duty on steel tyre cord/polyester tyre cord to accelerate the process of radialisation in India. It has also suggested the removal of port restriction on natural rubber imports.

On the issue of non-tariff barriers (NTBs) faced by exports of Indian tyres in the form of standards and tests, the committee has suggested that the Government, through the Bureau of Indian Standards (BIS), can take up the issue with standardisation organisations in other countries. It should be ensured that tyres with BIS certification should not be subjected to additional requirements of testing, standards and technical parameters etc, the report suggested.

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