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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.
Select raw meterials of tyra industry eligible for Nil/Concessional Customs duty from 2013 onwards.

PREFERENTIAL TARIFF FOR TYRES / RAW MATERIALS OF TYRE INDUSTRY

Under Bi-lateral / Regional Trade Agreements

 (%)
HSN Product/ Custms  Asia Pacific Indo- SAFTA  India Inda- India India India India India
Classification Category Duty Trade Sri Lanka Pakistan Bangladesh Singapore South  ASEAN Chile Mercosur Japan Malaysia
    (Basic) Agreement Free Sri Lanka Bhutan Economic Korea   Agreement   CEPA Trade
      (Formerly Trade   Maldives Comprehensive CEPA       Agreement Agreement
      Bangkok Agreement   Nepal Agreement            
      Trade     Afghanistan              
      Agreement)                    
  TYRES                        
4011 New Tyres (Al) 10 P.Car   8.5 Nil 7 Nil Duty Nil   for Not covered ** Not Not    
    Others  8.6       (for Bias Tyres *   covered covered *** 8
4011 30 00 Aero Tyres 3 2.58 Nil   Nil              
        3 Duty 0.75 2.25 Nil in Not Not 2.7  
                2013 covered covered  
4012 20  Used Rubber   Tyres 10 Not Not covered 7 Nil Nil    Not covered ** Not Not Not Not
    covered     Duty       covered covered covered covered
4012 10 Retreaded Tyres 10 Not Not covered 7 Nil Not * ** Not  Not  Not Not
    covered     Duty covered     covered covered covered covered
Raw Materials of Tyre Industry                      
4001 21 00 Natural Rubber 20 16 Not covered 7 Nil Not Not covered Not Not Not Not Not
          Duty covered   covered covered covered covered covered
4001 10 10 NR Latex 70 39.9 Not covered 7 Nil Not Not covered Not Not Not Not Not
          Duty covered   covered covered covered covered covered
4001 22 00 TSNR 20 16 Not covered 7 Nil Not Not covered Not Not Not Not Not
          Duty covered   covered covered covered covered covered
5402 19 10/ Nylon Tyre Yarn 10 Not Not covered 7 Nil  Not Not covered 8 Not Not 9 Not
5402 10 10     covered     Duty covered     covered covered   covered
5902 10 10 NTCF 10 Not  7.5 7 Nil Not - 6 Not Not  0 6
    covered     Duty covered   (Nil by 2013) covered covered    
          Nil              
400219 SBR 10     7 Duty   7.5 5     9.1 5
          Nil              
400220 PBR 10     7 Duty   9.38 5     9.1 5
7312 90 10 Steel Tyre Cord 10 Not Nil 7 Nil Not 9.38 5 Not Not 9.1 Not
    covered       covered   (Nil by 2013) covered covered   covered
5902 20 00 Polyeser Tyre Cord 5 Not 3.75 7 Nil Not - Nil  by Not Not 0 Not
    covered       covered   2016 covered covered   covered
2803 00 10 Carbon Black 5 4.3 Nil 5 Nil Not - 5 Not Not 4.5 5
          Duty covered     coverd covered    
 
HSN Product/ Custms  Asia Pacific Indo- SAFTA (SAARC) India Inda- India India India India India
Classification Category Duty Trade Sri Lanka Pakistan Bangladesh Singapore South  ASEAN Chile Mercosur Japan Malaysia
    (Basic) Agreement Free Sri Lanka Bhutan Economic Korea   Agreement   CEPA Trade
      (Formerly Trade   Maldives Comprehensive CEPA       Agreement Agreement
      Bangkok Agreement   Nepal Agreement            
      Trade     Afghanistan              
      Agreement)                    
3824 90 25 Precipated Silica 7.5 Not Nil 7 Nil Not 9.38% 5 Not Not Not 5
    covered       covered     covered covered covered  
2817 00 10 Zinc Oxide 7.5 Not Nil 6 Nil Not  Not Not Not Not Not Not
    covered       covered covered covered covered covered covered covered
2907 21 00 Resorcinol 7.5 Not Nil 6 Nil Not 9.38% 5 Not Not 6.8 5%
    covered       covered     covered covered  
7217 90 99 Bead Wire 5 Not  Nil 6.2 Nil Not 3.75% 5 Not Not 4.2 5
    covered       covered     covered covered    
2912 11 00 Formaldehyde 7.5 Not Nil 7 Nil Not 9.38% 5     6.8 5
    covered       covered            
2823  00 10 Titanium Dioxide 7.5 Not Nil 7.00 Nil Not 9.38% 5 Not Not 6.8 5
    covered       covered     covered covered    
3823 11 00 Stearic Acid 20 Not  Nil 9.4 Nil Not  18% Not Not Not Not Not
    covered       covered   covered covered covered covered covered
2707 99 00 CBFS 2.5 Not Nil 7 Nil Not Nil duty by Not  Not Not Not Not
    covered       covered 2017 covered covered covered covered covered
3812 10 00/ Rubber Chemicals 7.5 6.97 Nil 7 Nil Not Nil duty by 5 Not Not 6.8 5
3812 30 10 (Acceelerators/           covered 2017   covered covered    
Anti Oxident)                        
4002 90 00 V P Latex 10 Not Nil 7 Nil Not covered 9.38% 5 Not Not Not Not
    covered             covered covered covered covered
4003 00 Reclaimed Rubber 10 Not  Negative 7 Nil Not 9.38% 8 Not Not Not 8
    covered List     covered     covered covered covered  
3910 00 00 Silicone Emulsion 7.5 Not Nil 7 Nil Not Nil duty by Not Not Not Not 5
    covered       covered 2017 covered covered covered covered  
2503 00 90 Insoluble sulphur 5 Not Nil 7 Nil Not 3.75% Not Not Not 4.5 3
    covered       covered   covered covered covered  
2712 20 10 Paraffin Wax 10 Not Nil 6.2 Nil Not Not Not Not Not 9.1 Not
    covered       covered covered coveree covered covered   covered
4002 70 00 EPDM 10 Not Nil 7 Nil 5 Not 8 Not Not 0 8
    covered         Covered   covered covered  
2711 14 00 Butadiene 10 Not Nil 6.2 Nil Not Not Not Not Not Not Not
    covered       covered covered covered covered covered covered covered
 
*  Industrial / Construction / Retreaded Truck/Bus  Tyres duty will be Nil in 2016 under India-Korea CEPA.    (Concessional Duty is 9.38% in 2011) No Tariff concession for 
   Major categories of Tyres.  Notification No.137/2010-Customs dated 31.12.2010.
** P. 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).( Concessional Duty  8%  in 2011).   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).  (Concessional Duty 5% in 2011), under ASEAN FTA.
Notification No.46/2011-Customs dated 1.6.2011
Asia Pacific:  General Examption 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 and  No.107/2009-Customs dated 23rd Sept. 2009 and 133/2010 dt. 31.12.2010
India - Singapore: General exemption NO.41, 42 and 43 of 2007, No.73 and 74 and 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 Notificaation No.69/2011-Customs dated 29.7.2011
***  No concession on major tyre categories.  Concession is only for  Agricultural /  forestery/construction or industrial tires.  Concessional Duty in 2011 9.2%.
India-Malaysia Agreement.  Customs Duty No.53/2011-Customs dt. 1.7.2011.   Concessional Duty  for Truck/Bus (Radial), Passenger (Radial) and Motor cylce @ 8% in 2011.