Tyre prices may increase after Budget

The tyre industry expects prices to increase further after the Budget as the prices of the raw material are on an upsurge.

Natural rubber (NR) prices have been appreciating since the last few months. The price of benchmark grade RSS-4 increased to Rs 140 a kg today from Rs 134 a kg last week. The possibility of a second round of price rise this year will be viewed only after the Budget, said a top official of Automotive Tyre Manufacturers Association (Atma). “We have submitted some proposals to the Minister for Finance in the pre-Budget discussion and hope for the best. The bull phase in the NR market is likely to continue for the next few months as this is an off season. So tyre companies can not go for long with the existing price pattern,” he said.

It is too early to comment on a second round of price increase, said AS Mehta, director (marketing), JK Tyres. “The import duty structure on NR and tyres is highly negative to the industry and the duty on NR should be reduced. at present, the duty on tyre is 10 per cent while NR has got an import duty of 20 per cent. How can we justify just half the duty of raw material for the finished product,” he added.

“The industry also expects a rollback in the stimulus package in a phased manner. This would add further pressure on the industry. So there is every possibility of a review after the Budget. The excise duty structure may also be enhanced by 2 per cent. The industry wishes to continue with the stimulus package as the financial crisis is not over. So we will have to analyse the market conditions for what move should be adopted after the budget,” he added.

Satish Sharma, chief (manufacturing and marketing) of Appollo Tyre said there is a lot of pressure on the tyre companies as price of NR is increasing alarmingly. In a pre-Budget memorandum, Atma pointed out that tyre exports continue to be seriously affected due to recessionary conditions prevailing outside the country.