The crunch in domestic availability of carbon black is forcing the domestic tyre companies to take unplanned shutdowns in the recent past for want of this essential raw-material, according to tyre makers.
Automotive Tyre Manufacturers Association (ATMA), whose members account for over 90 per cent of tyre production, in a representation to the Ministry of Commerce & Industry has asked for facilitating easy import of the raw material to ride out the difficult phase having an adverse impact on tyre production in the country.
According to ATMA, factors that have led to the domestic deficit in Carbon Black taking a grim turn include a mismatch in capacity addition by domestic carbon black Industry in comparison to growing demand from the domestic Tyre Industry and increased exports by domestic carbon black manufacturers.
The domestic demand-supply gap in carbon black, which was 14 per cent in 2016-17 has gone up to 20 per cent in year 2017-18, said ATMA in its representation.
“As it is, domestic Tyre Industry is facing the ongoing concern of shortfall in overall availability of natural rubber (NR) on a regular basis. Carbon black shortage has only added to the woes of Tyre Industry in India”, said Mohan Kurian, Convener, ATMA Supply Chain & Resources (SCR) Group.
Notwithstanding domestic crunch, steep anti-dumping duty has been imposed on carbon black imports from China, the single largest producer of this raw material in the world accounting for around 40 per cent of its global production.
“Sustainable ways of improving raw material availability for the tyre industry need to be worked out for the continuation of Make in India drive in this vital sector. Domestic Tyre Industry is anticipating good growth in tyre demand after a prolonged period of overall slowdown. It becomes imperative to improve the carbon black availability situation urgently”, said Kurian.
According to ATMA, tyre industry is left with no other choice but to import carbon black to meet the domestic deficit. However steep anti-dumping duty amounting to around 40 per cent of the import price is in place in India making such duty paid imports almost prohibitive.
The unplanned cuts in tyre production due to the shortfall in carbon black availability would only lead to higher imports of finished tyres from outside India thereby discouraging value addition within the country. Besides, substantial investments made by the Indian Tyre Industry in capacity creation and enhancement, primarily in truck & bus radial categories, will suffer due to the shortfall of this essential raw material, said ATMA.
ATMA has asked the Government to allow tyre companies to import carbon black on a duty-free basis to the extent of the existing gap between demand-supply to enable the domestic tyre industry continue with its planned production.
Anti-dumping duty applicable on carbon black imports from China needs to be waived till such time the domestic availability improves. At the same time, export of carbon black from India needs to be regulated by way of fixing a minimum (higher) export price and/or quantitative restriction.
As carbon black is a critical raw material for the manufacture of tyres and the entire transport sector mobility is dependent on tyres, concerted efforts are made by the government on a long-term basis to encourage carbon black manufacturing capacity within India as a part of the ‘Make in India’ initiative, ATMA has stated.
According to ATMA, the shutdown of Continental Carbon plant at Ghaziabad over the past two months has further reduced the domestic availability of carbon black. Steps need to be taken to restart the plant urgently (after ensuring that the plant meets all statutory regulations) so that availability issue of carbon black could be addressed to some extent.