ATMA seeks rubber cess waiver or reduction

In counter rising prices of natural rubber, the Automotive Tyre Manufacturers Association (ATMA) has requested that the government should waive or reduce cess on rubber, which would help ease the financial burden on tyre companies in India.

ATMA also suggested that the government should allow manufacturers to take full CENVAT on the total cess amount paid, against R&D expenses. ‘In view of the high prices of natural rubber during the last few years, charging of cess only adds to the input costs for the tyre sector,’ said Raghupati Singhania, who heads JK Tyre and who’s also the chairperson at ATMA.

Rubber prices have risen by 33.64 percent over the last one year. Current prices stand at Rs 120 per kilo, against Rs 89.79 per kilo a year ago. Plus, a cess of Rs 1.50 per kilo is also paid by tyre manufacturing companies. No wonder then that according to ATMA, rubber accounts for up to 42 percent of raw material cost of the tyre industry.

‘At such high prices, there is no justification for natural rubber growing interests to be supported by any cess. An increase of Rs 1 per kg on rubber adds to an incremental burden of Rs 49 crore on the tyre sector, taking into account the natural rubber consumption of 4.91 lakh tons by the sector,’ said Singhania.

According to Rubber Board data, of India’s total rubber consumption of 8.6 lakh tons in 2007-08, the tyre sector accounted for about 4.9 lakh tons.