The government maintains a high import duty on rubber to protect the domestic rubber farmers.
JK Tyre & Industries has sought revision in inverted duty structure in the forthcoming Budget, saying it will offer a level-playing field to local tyre manufacturers. "We are probably the only country in the world with such an inverted duty structure wherein one pays almost three times to import raw materials than a finished product. "Under the current duty regime, we pay 20 per cent to import raw materials, primarily rubber, while the duty on finished tyres is only 7.7 per cent.
"This needs to change and I hope Finance Minister Arun Jaitley does something to correct this anomaly in the inverted duty regime in the Budget," JK Tyre & Industries' President and Director Arun K Bajoria told PTI here over the weekend. On his other expectations from the Budget, he said he hopes the Finance Minister will ensure that the economy is revived. The government maintains a high import duty on rubber to protect the domestic rubber farmers.
When asked about sales, he said though the reversal of 4 per cent excise duty will have some impact on OEM sales, he expects to close the fiscal with an overall 20 per cent increase in sales this fiscal. On the continuing fall in natural rubber prices and crude, which is a key component in synthetic tyres, he said he expects around 2 per cent cut in tyre prices soon. The Raghupati Singhania-led company meets its raw material needs by importing around 30 per cent of natural rubber while overall as much as 68 per cent of the raw material is natural rubber only.
Currently, OEMs constitute 25 per cent of sales and the rest comes from replacement market. On capacity utilisation, he said it is at 80 per cent now and expressed hope that it will go up further as the economy improves. Bajoria said the company's Rs 1,500-crore new plant, coming up in Chennai, will be ready by the end of the fiscal which will double its capacity to 32,000 radial tyres a day.
He added that the company is expecting a 15 per cent rise in exports this fiscal. The Delhi-based company has presence in 90 countries with nine plants in India and one in Mexico, rolling out more than 20 million tyres annually.