Indian rubber industry feeling the pinch of US-China tariff war

India’s decision to increase the import duty on car radials and footwear may provide only a marginal relief to the rubber industry, which has started feeling the adverse impact of the US-China tariff war, said industry executives.

The Centre has raised the import duty on car radials to 15% from 10% and on footwear to 25% from 20% as part of measures aimed at controlling the current account deficit. The increases come a few months after the government hiked the duty to 15% from 10% on truck and bus radials (TBR).

The development also comes at a time when imports of tyre and rubber products have been increasing amid the escalating tariff war between the US and China.

“The step partially addresses the problem as it will slow down imports and encourage more capacity addition,’’ said Rajiv Budhraja, director general of Automotive Tyre Manufacturers’ Association.

He said the import of tyres of light commercial vehicles, taxis and motorcycles from China could increase further if the US were to impose higher tariffs on them.

The government not only increased import duty but also levied anti-dumping duty as the share of Chinese TBR rose to more than 40% of the total tyre imports.

The tyre industry had demanded a reduction in the import duty of natural rubber and an increase in the import duty of finished goods. The government has now acceded to one part of the demand. However, executives from the non-tyre sector said the increase should have been more. “The 5% increase is too low. The duty should be raised by at least 10% to have any noticeable impact,’’ said Kamal Chaudhary, president of the All India Rubber Industries Association (AIRIA).

Executives said the increase in import duty would provide only partial relief because footwear accounted for just one of the non-tyre products coming to India. “There has been an increase in the import duty on certain finished products like hoses and belts since last month. We fear that it will go up as the trade war between the US and China intensifies,’’ said Vikram Makkar, senior vice president of AIRIA.

The association has been demanding an increase in the import duty on finished non-tyre goods. “While the average duty on most of the finished goods has been 10%, the duty on raw materials ranges from 15% to 20%, thus blunting the competitive edge of the industry,’’ said Makkar.

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