Source : PTI | The ongoing war in West Asia is expected to significantly disrupt tyre exports, increase raw material costs, and create logistical challenges for the industry and would need urgent policy support to mitigate emerging challenges, the Automotive Tyre Manufacturers Association (ATMA) said on Thursday.
The tyre industry body said it has submitted a representation to the government highlighting the serious implications of the ongoing West Asia conflict for the Indian manufacturers.
ATMA said it has requested the government to categorise tyre industry and its Tier-1 supply chain as ‘essential’ sectors to ensure uninterrupted availability of Natural Gas and LPG, which are critical inputs used in tyre manufacturing.
Any disruption in the supply of these fuels could adversely impact tyre production and thereby the broader mobility ecosystem that supports logistics, agriculture, healthcare, public transport and other essential services, it said in a statement.
“For the Indian tyre industry, the combined impact of rising input costs, freight disruptions and export uncertainties could affect competitiveness in international markets,” ATMA Chairman Arun Mammen said in a statement.
He further said, “At a time when India is focused on strengthening its export momentum, it is important that the industry receives timely policy support to navigate these challenges.”
ATMA, in its representation to the government, stated that “escalating geopolitical tensions in West Asia are expected to significantly disrupt tyre exports, increase raw material costs, and create logistical challenges for the industry”.
India exports tyres worth approximately $250-260 million annually to West Asia which are likely to be affected, it added.
Additionally, ATMA said disruptions in critical maritime routes such as the Strait of Hormuz and the Suez Canal may also impact exports to Europe, the US and Africa, resulting in longer transit times and higher freight costs.
“The industry is also facing cost pressures arising from the sharp volatility in crude oil prices, which is hovering around $100 per barrel,” it said.
Crude oil derivatives account for 60- 70 per cent of the total raw material cost in tyre production. Several key tyre manufacturing inputs, including synthetic rubber, carbon black, processing oils and tyre cord fabrics, are derived from crude oil, ATMA noted.
The disruptions in global shipping routes are likely to adversely affect the raw material supply chain of the tyre industry, which is dependent on imports of several critical inputs such as natural rubber, synthetic rubber, chemicals, nylon tyre cord fabric, and other petrochemical derivatives, it added.
ATMA said it has sought support from the government, including reinstatement of earlier RoDTEP (Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) rates for tyres, enhancement of duty drawback rates, and addressing the inverted duty structure between tyres and natural rubber, a key raw material.
Besides, it also urged the government to facilitate imports of natural rubber by removing import restrictive conditions such as port restrictions on import, removing pre-import conditions, and restoring the export obligation period to 18 months and waiving or reducing import duty on other key raw materials which are either in short supply domestically or not manufactured in the country.
