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Run up to the Budget: Tyre sector

Background

The tyre industry is estimated to be about Rs 100 bn in size, with 12 companies accounting for around 85% of the total production.

Approximately 20% of total truck and bus tyres produced domestically is exported. Over 30% of the country's exports go to the US.

  • The performance of the tyre industry is strongly linked to that of automobile and surface transport sectors.
  • Raw material cost accounts for around 50% of the total cost of production of tyres. Because of raw material intensive nature, the profitability of the industry is largely dependent on the price trends of the raw materials. Nylon Tyre Cord Fabric and Natural Rubber are the main raw materials with weightage of 26% and 24% respectively in the total raw material cost.

    Production statistics

    Tyre Production in India (‘000s)

    Type

    Apr-Oct 01

    Apr-Oct 00

    Change

    Truck & Bus

    4,975

    5,053

    -2%

    Passenger Car

    4,373

    3,974

    10%

    Jeep

    764

    685

    12%

    Light Commercial Vehicle

    1,336

    1,253

    7%

    Tractor Front

    681

    705

    -3%

    Tractor Rear

    457

    489

    -7%

    Tractor Trailer

    173

    141

    23%

    Scooter

    5,112

    5,661

    -10%

    Motor Cycle

    6,743

    6,378

    6%

    Moped

    79

    58

    36%

    Source: Automotive Tyre Manufacturers Association

    Key Inputs
    Nylon Tyre Cord Fabric, Natural Rubber, Carbon Black, Rubber Chemicals, Butyl Rubber

    Duty Structure

     

    Excise

     

    Customs (Basic)

    Products

    2000-01

    2001-02

    2000-01

    2001-02

    Pneumatic tyres of truck, bus, car, LCV, tractor (front) and tractor trailer

    32%

    32%

    35%

    35%

    Pneumatic tyres for two wheelers & tractors (rear)

    16%

    16%

    35%

    35%

    Pneumatic tyres for animal driven vehicles and hand crafts

    Nil

    Nil

    35%

    35%

    Inputs

     

     

     

     

    Natural rubber

    Rs 0.50/kg cess

    Rs 0.50/kg cess

    25%

    25%

    Synthetic Rubber

    16%

    16%

    35%

    35%

    Carbon Black

    16%

    16%

    35%

    35%

    Zinc Oxide

    16%

    16%

    35%

    35%

    Industry's demand from Union Budget 2002-03

    Some of the major demands made by Automotive Tyre Manufacturers Association are as follows:

    • Excise duty on tyres should be reduced, especially tyres for commercial vehicles.
    • Import duty on raw materials for tyre industry should be 10% lower than import duty on tyres.
    • Tyres should be excluded from concessional rate of import duty under the Bangkok Agreement.
    • Import duty on natural rubber and butyl rubber should be reduced from 25% and 35% respectively to 10%.
    • Import duty on steel tyre cord and polyester tyre cord should be waived.
    • Nominal excise duty should be imposed on ADV tyres.
    • No cess should be levied on imported rubber.

    Key Players
    MRF, Apollo Tyres, Ceat, Dunlop India, J K Industries, Goodyear India, Modi Rubber.

    YOU MAY ALSO WANT TO READ:
    The Rediff Budget Special
    The Rediff-Dun & Bradstreet Budget Analysis
    Run-Up To The Budget
    Money


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