The Government of India has reduced the import duty on natural rubber to 7.5% from previous 20 percent on Thursday. The decision has came as a relief for car makers in the country, who were struggling with the shrinking margins due to skyrocketing prices of natural rubber. Natural rubber is an essential input material used in the manufacturing of cars.
According to Mr. Rajiv Budhiraja, Secretary-General, Automotive Tyre Manufacturers' Association "Prices of natural rubber would increase and even the current price of Rs 200 per kilogram has had tremendous pressure on industry margins. What is more, despite cumbersome market conditions, Indian tyre makers have not yet gone in for any major price hike. But, that would not be the situation forever, as any more cost pressure, would have a telling effect on them and it would make it extremely difficult to sustain prices of end-products.”
The upward shooting price of natural rubber has forced the car makers to announce a hike in the price of their cars in India from January 2011, as leading tyre manufactures like Ceat and JK Tyres and Industries have already increased the price of their tyres by up to 2% and 5%, respectively.
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