Trump tariff to constrain Indian tyre makers to sustain competitive momentum in US: ATMA

The steep Trump tariff will severely constrain Indian tyre makers' ability to sustain the momentum established in the last few years in America, and there is a need for immediate policy support to help mitigate the adverse impact, the Automotive Tyre Manufacturers' Association (ATMA) said on Thursday.

Tyre exports from India to the US will now face a tariff of 50 % on most categories and 25 % on specific categories.

Competing economies such as China, Thailand, Vietnam, Cambodia and Indonesia continue to attract far lower tariffs, putting India at a distinct strategic disadvantage in its largest export market, the Automotive Tyre Manufacturers' Association (ATMA) said in a statement.

"Hike in US tariffs will severely constrain the ability of Indian manufacturers to sustain export momentum established in the last few years, particularly since the US is our largest export destination," ATMA Chairman, Arun Mammen said.

The Indian tyre industry has invested over Rs 28,000 crore in recent years to expand both greenfield and brownfield capacities to meet rising domestic and global demand, he noted.

Indian tyres are currently exported to more than 170 countries, of which the US accounts for the single largest share of 17 %. In FY 24-25, India's tyre exports crossed Rs 25,000 crore for the first time ever, of which the US accounted for over Rs 4,300 crore, ATMA said.

The US' 50 % tariffs on Indian goods came into effect from August 27, and will impact exports and job creation in labour-intensive sectors such as shrimp, apparel, diamonds, leather and footwear, and gems and jewellery among others.

ATMA also highlighted the "need for enhanced incentives for research and development as well as advanced manufacturing support to strengthen the long-term competitiveness of the Indian tyre industry in global markets".

Stating that developing an export market requires years of sustained effort and investment, Mammen said "While the Indian tyre industry has the resilience to explore new geographies, this is a time-consuming process.

Immediate policy support will be critical to ensure that India does not lose ground in a highly competitive global market."

The tyre industry body pointed out that the export competitiveness of tyres from India is already under pressure as the current RoDTEP (Remission of Duties and Taxes on Exported Products) rates for tyres, fixed at 1.3 % and 0.8 % under Advance Authorisation, are far below the actual incidence of taxes and duties, as compared to 3 % under the erstwhile MEIS (Merchandise Exports from India Scheme).

"The industry has therefore urged that RoDTEP benefits be raised to 4 % and extended to tyre exports under Advance Authorisation as well," ATMA said.

It further said for a long period tyre manufacturers are faced with the challenge of a shortfall in domestic supply of natural rubber, which forces the tyre industry to import nearly 40 % of its requirement of natural rubber, a critical raw material for manufacturing of tyres.

Considering this, ATMA said it has requested the government to allow duty-free imports equivalent to the demand-supply gap.