Investment World
-
Tyres
Industry & Economy
-
Tyres
Tyres: Not a smooth ride
S. Muralidhar
B. Krishnakumar
The tyre industry would probably have a very marginal positive impact if the overall Budget proposals are taken into consideration. The reduction in peak rate of Customs duty from 35 per cent to 30 per cent would result in a lower input cost for tyre producers.
On the excise duty front, the tariff on tyres for the replacement market has been retained at 32 per cent. However, the move to reduce excise duty on tyres for the original equipment market would have some impact on tyre producers. The excise duty has been reduced to 16 per cent for tyres supplied to the original equipment segment.
This move would not have too much of a positive impact as tyre companies would be forced to pass on the benefits to auto producers in the form of lower product prices. In any case, the demand from the original equipment segment is relatively insignificant in the all-important truck and bus tyre segment.
With a major exposure to the replacement market, the top tyre producers including MRF and Apollo would not have much of a positive impact due to the changes in excise duty. Companies such as Goodyear, JK Industries and MRF have a presence in the passenger car and tractor segments. Hence, these companies would benefit from a reduction in excise duty for original equipment tyres.
Send this article to Friends by
E-Mail
|
