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REGIONAL TRADE AGREEMENTS (RTAs) AN OUTLINE WITH REFERENCE TO TYRE INDUSTRY

Trade Agreements are broadly on the following lines:

  • RTAs (Regional Trade Agreements, can be bi-lateral or plurilateral)
  • RTAs aim to establish a Preferential Trade Area (PTA) and/or a Free Trade Area (FTA)
  • Framework Agreement (setting the ground for establishing a Free Trade Area) generally precedes complete FTA.
  • In case of simultaneous applicability of more than one RTA, trade can take benefit only under one Agreement
  • RTAs are WTO compatible.

    The following are the important and integral components of any RTA:
  • Rules of Origin : prescribing minimum value addition in exporting country; Preferential/Concessional Rate of Import Tariff: specified as extent/percentage of concession on the MFN rate (i.e. applied/basic rate of normal customs duty);
  • RTAs have assumed added significance due to slowdown of trade talks at multilateral platforms (WTO), each industry/sector trying to source/sell globally, intense competition, progressive reduction in import tariffs etc.
Tyre Industry Related (key features and practical dimension)

 The following RTAs concern tyres and raw materials of tyre industry:  

a)     Asia Pacific Trade Agreement (Bangkok Agreement) Tyres and inner tubes can be imported from signatories to the  Bangkok Agreement (please see list attached) at concessional rate of customs duty
for signatories to the Agreement and specific details, please refer to the statement  given below).

 

b)    Indo-Sri Lanka Free Trade Agreement Tyres can be imported at nil customs duty. Natural Rubber is in the Negative List of India.  Several other raw-materials of tyre industry are eligible for duty concessions of varying magnitude.

 

c)     SAPTA  (SAARC Preferential Trading Agreement) Truck & Bus, LCV and Jeep tyres and select raw-materials of tyre industry can be  imported into India at concessional/Nil rate of duty  from signatory countries, (viz. Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka) Reference statement given below.  

 

d)    India-Singapore Comprehensive Economic Co-operation Agreement: Truck / bus, passenger car (bias) and other Bias tyres can be imported into India at Nill custom duty.

 

e)    India-South Korea CEPA:Tytes in the Negative List (Excluded from Tariff Concession).
Select raw materials of tyra industry eligible for Nil/Concessional Customs duty from 2015 onwards.

 

f)    ASEAN Agreement:Key tyre categories tariff to be brought down to 5% by 2016.

PREFERENTIAL TARIFF FOR TYRES / RAW MATERIALS OF TYRE INDUSTRY

Under Bi-lateral / Regional Trade Agreements

(%)
HSN Classification Product/ Category   Customs  Duty in % (Basic) Asia Pacific Trade Agreement (Formerly Bangkok Trade Agreement) Indo- Sri Lanka Free Trade Agreement SAFTA -  Pakistan, Sri Lanka SAFTA - Bangladesh, Bhutan, Maldives, Nepal, Afghanistan India-Singapore Economic Comprehensive Agreement India- South Korea (CEPA) India -ASEAN India-Chile Agreement India - Mercosur India- Japan CEPA Agreement India - Malaysia Trade Agreement
TYRES
40112010 Truck/Bus  (Radial) 10 8.6 Nil Duty 6 Nil Duty Not covered Not Covered 7 Not covered Not covered Not covered 7
40112090 Truck / Bus( Bias) 10 8.6 Nil Duty 6 Nil Duty Nil Duty Not covered 7 Not covered Not covered Not covered Not covered
40111010 Motor Cars (Radial) 10 8.5 Nil Duty 6 Nil Duty Not covered Not covered 7 Not covered Not covered Not covered 7
40111090 Motor Cars (Bias) 10 8.5 Nil Duty 6 Nil Duty Nil Duty Not covered 7 Not covered Not covered Not covered Not covered
40113000 Aircraft 0 2.58 Nil Duty 3 Nil Duty 0.75 2.25 2 Not covered Not covered 0 Not covered
40114000 Motorcycle 10 8.6 Nil Duty 6 Nil Duty Nil Duty Not covered 7 Not covered Not covered Not covered 7
40114020 Scooter 10 8.6 Nil Duty 6 Nil Duty Nil Duty Not covered 7 Not covered Not covered Not covered Not covered
40119300 Industrial/Const.Tyres 10 8.6 Nil Duty 6 Nil Duty Nil Duty 7.81 5 Not covered Not covered 7.3 5
40119200 Tractor/(Agriculture) 10 8.6 Nil Duty 6 Nil Duty Nil Duty 7.81 5 Not covered Not covered 7.3 5
4012 20  Used Rubber Tyres 10 Not covered Not Covered 6 Nil Duty Nil  Duty Not covered 7 Not covered Not covered Not covered Not covered
4012 10 Retreaded Tyres 10 Not covered Not covered 6 Nil Duty Not covered 7.81 7 Not covered Not covered Not covered 5
Raw Materials of Tyre Industry 
4001 21 00 Natural Rubber 20/Rs.20/kg (whichever is lower) 16 Not covered 6 Nil Duty Not covered Not covered Not covered Not covered Not covered Not covered Not covered
4001 10 10 NR Latex 49/kg 39.9 Not covered 6 Nil Duty Not covered Not covered Not covered Not covered Not covered Not covered Not covered
4001 22 00 TSNR 20/ Rs.20/kg 16 Not covered 6 Nil Duty Not covered Not covered Not covered Not covered Not covered Not covered Not covered
5402 19 10/ 5402 10 10 Nylon Tyre Yarn 10 Not covered Not covered 6 Nil Duty Not covered Not covered 7 Not covered Not covered 7.3 Not covered
5902 10 10 NTCF 10 Not covered 7.5 6 Nil Duty Not covered Not covered 5 Not covered Not covered 0 5
400219 SBR 10     6 Nil Duty Note covered 5 5     7.3 5
400231 Butyl 5     6 Nil Duty Note covered 4 2     Not covered 2
400220 PBR 10     6 Nil Duty   7.81 5     7.3 5
7312 90 10 Steel Tyre Cord 10 Not covered Nil 6 Nil Duty Note covered 7.81 5 Note covered Note covered 7.3 Note covered
5902 20 00 Polyester Tyre Cord 5 Not covered 3.75 6 Nil Duty Note covered 5 5 Note covered Note covered 0 Note covered
2803 00 10 Carbon Black 5 4.3 Nil 5 Nil Duty Note covered Note covered 5 Note covered Note covered Not covered 5
3824 90 25 Precipated Silica 7.5 Not covered Nil 6 Nil Not covered 7.81 2.5 Not covered Not covered 5.5 2.5
2817 00 10 Zinc Oxide 7.5 Not covered Nil 5.5 Nil Not covered Not covered Not covered Not covered Not covered Not covered Not covered
2907 21 00 Resorcinol 7.5 Not covered Nil 6 Nil Not covered 7.81 2.5 Not covered Not covered 5.5 2.5
7217 90 99 Bead Wire 5 Not covered Nil 5.6 Nil Not covered 3.13 5 Not covered Not covered 2.5 5
2912 11 00 Formaldehyde 7.5 Not covered Nil 5.5 Nil Not covered 7.81 2.5     5.5 2.5
2823  00 10 Titanium Dioxide 7.5 Not covered Nil 6 Nil Not covered 7.81 5 Not covered Not covered 5.5 5
3823 11 00 Stearic Acid 20 Not covered Nil 7.2 Nil Not covered Not covered Not covered Not covered Not covered Not covered Not covered
2707 99 00 CBFS 2.5 Not covered Nil - Nil Not covered Not covered Not covered Not covered Not covered Not covered Not covered
3812 10 00/ 3812 30 10 Rubber Chemicals (Accelerators/ Anti Oxidant) 7.5 6.97 Nil 6 Nil Not covered 7.81 2.5 Not covered Not covered 5.5 Not covered
4002 90 00 V P Latex 10 Not covered Nil 6 Nil Not covered Not covered 5 Not covered Not covered Not covered Not covered
4003 00 Reclaimed Rubber 10 Not covered Negative List 6 Nil Not covered Not covered 7 Not covered Not covered Not covered 7
3910 00 00 Silicone Emulsion 7.5 Not covered Nil 5 Nil Not covered Not covered Not covered Not covered Not covered Not covered 2.5
2503 00 10 Insoluble sulphur 5 Not covered Nil 6 Nil Not covered Not covered Not covered Not covered Not covered 3.6 2
2712 20 10 Paraffin Wax 10 Not covered Nil 5.6 Nil Not covered Not covered Not covered Not covered Not covered 7.3 Not covered
4002 70 00 EPDM 10 Not covered Nil 6 Nil 5 Not covered 7 Not covered Not covered 7.3 7
2711 14 00 Butadiene 10 Not covered Nil 5.6 Nil Not covered Not covered Not covered Not covered Not covered Not covered Not covered
 
India - Korea FTA: Industrial / Construction / Retreaded Truck/Bus Tyres duty will be Nil in 2016. Notification No.137/2010-Customs dated 31.12.2010 and Notification No.123/20-Customs dt. 30.12.2011.
ASEAN FTA: Passenger Car, Truck & Bus, Scooter/Motor cycle & Used Tyres : (included in Sensitive Track (ST) - Tariff to be brought down from 10% in 2010 to 5% by 1st Jan 2016 in a graded / phased manner (yearwise). Other Tyre categories in the Normal Track (NT) - Tariff to be brought down from 10% in 2010 to "Nil" by 31st Dec. 2013. In a graded / phased manner (year wise). Notification No. 46/2011-Customs dt. 1.6.2011 and No.127/2011 dt. 30.11.2011.
Asia Pacific FTA: General Exemption No.30/2007, Customs Notification Nko.72-Cus dt. 22.7.07, 69/2006 dt. 30.6.2006, 89/2006-Cus dt. 1.9.06 and 134/2006 dt. 30.12.2006.
India-Sri Lank FTA: General Exemption No.28/2007, No.26/2000 dt 1.3.2000, 69/06 dt, 30.6.06, 43/CUS dt. 18.3.06, 3/2007-Cus dt. 5.1.07, 128/2006-Cus dt. 30.12.06, 60/2000 Cus dt. 12.5.2000.
SAFTA (SAARC) Agreement: General Exemption No.37/2007, 140/2006, dt. 30.12.06,No.105/99-CUS dt. 10.8.99, 68/2006-Cus dt. 30.6.06, 67/2006-Cus dt. 30.6.06 145/2007-Cus, 127/06-Cus d. 30.12.06 and Notification No.125/2007-Cus dt. 31.12.2007, No. 107/2008 dt. 6th Oct. 2008,107/2009-Customs dated 23rd Sept. 2009 , No.133/2010 dt.31.12.2010 and 125/2011-Customs dated 30.12.2011.
India - Singapore FTA: General exemption No. 41, 42 & 43 of 2007, No.73, 74 & 75 dated 22.7.2005 and No.38/2006-Cus dt. 28.4.2005, 49/2007 dt. 29.3.2007. No.45/08-Customs dt. 9.4.08
India-Japan CEPA Agreement: Customs Notification No.69/2011-Customs dated 29.7.2011 and 124/2011-Customs dt. 30.12.2011 and No.28/2012-C ustoms dt. 27.4.2012. Concession is only for Agricultural / forestery/construction or industrial tyres. No concession on major tyre categoaries. Latest Notificaiton No.17/2013 dt. 26.3.'13.
India-Malaysia Agreement: Customs Duty No.53/2011-Customs dt. 1.7.2011 and No.128/2011 dt. 30.12.2011.