After years of consultation, Goods & Services Tax (GST) is finally here. There is little doubt that the groundbreaking indirect reform in post independence India is going to impact on the way business is conducted in India. For the tyre manufacturing industry, they stand in support of all progressive laws that promote ease in ding business and bring in operational and transparency efficiencies.
It is but natural for doubts to exist in the minds of the tyre and consumers because of the hard-to-meet accounting issues and bothersome compliance not to mention the increase in paperwork but whatever initial pains will result into future gains.
The fortunes of the tyre industry are directly interlinked with the India’s economy. When there is economic growth, there is increased movement of products and services that can lead to more demand for tyres. The goal of GST is to provide a sustained boost to the $2 trillion Indian economy. The tyre industry expects that it will benefit directly from the tax reforms.
GST has also been designed for the enhancement of the drive towards formalization the economy. This is welcome news for the tyre industry because it has been bearing the brunt of the dumping of tyres for years. In the last 2 years, there has been indiscriminate importation of radial tyres particularly truck and bus radials. As such, imported tyres account for 40% of the market for replacement tyres for TBR for the fiscal year 2016-17. The growth in imported tyres has seriously deprived the industry and its value chain including the growers of natural rubber the much deserved opportunities for growth.
According to studies majority of the tyre imports are being contracted between traders and independent importers that usually resort to unfair trade practices like under invoicing and wrong classification of the product categories to avoid the taxes imposed by the government on imported tyres.
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