The tyre industry is burning rubber over the issue of cheap Chinese imports. A huge influx of imported tyres in the past 12 months is causing Indian tyre companies a lot of heart burn in the truck, bus and car radial replacement market.
Sources in the tyre industry say already imported tyres comprise a staggering 20% of the car and 25% of the truck radial replacement market which makes the import segment market leaders instead of local biggies like JK Tyre, Apollo, MRF or Ceat.
Tyre dealers, on the other hand, say the imports meet local quality standards, are duly BIS certified and are cheaper than Indian tyres because they have passed on the reduction in raw material prices. With both the domestic industry and the tyre dealers demanding action from the government, the issue is poised for a bumpy ride ahead.
Said Vikram Malhotra, director-marketing, JK Tyre: "We are getting badly injured by the flood of imports because they are typically priced 20-30% lower. Sometimes it's lower than our raw material price so we cannot match that. Imports were up 120-130% last year and this June it jumped 25-30% over May 2015.
We have been petitioning the government but there has been no assurance as yet." The problem, he said, was that the imported tyres pay lower duty than the Indian companies pay for raw material due to the Asean agreement. "The tyre imports pay 5-7% duty while we pay 25% on raw material like rubber so it's a double hit for us," said Malhotra.
The bone of contention is the 3-3.5 lakh units per month truck radial replacement market and the 12-14 lakh units per month car radial replacement market. While vehicles come fitted with made in India tyres, replacement demand is now driving towards imports from Taiwan, Korea and China instead. Meanwhile MNC tyre biggies say their quality will set them apart even as Indian tyre companies want anti-dumping duty.
"Over the past few weeks there has been an increase in import of Chinese tyres into India. We are not unduly bothered about these as we know what Michelin quality is. Besides, we compete with all the tyre manufacturers all over the world," said Nour Bouhassoun, chairman and president, Africa-India-Middle East, Michelin.
Tyre dealers, though, say the imports are consumer friendly because they reflect global raw material prices better than locally made tyres. Said SP Singh, convenor, All India Tyre Dealers Association (AITDA): When the government mandated BIS quality certification for all tyres sold in India it created a two-year import lull as imported brands ought necessary certification. During that time, local tyre companies hiked prices by 25-35%. Today raw material prices have come down to 2009 level but the sharp price hike has not been rolled back. But imported tyre prices have come down in tune with the drop in rubber and other raw material prices so they are more affordable."
AITDA has now locked horns with domestic industry in seeking that no anti-dumping duty in imposed on imported tyres. "The domestic industry is in the habit of seeking tariff and non-tariff barriers but the truth is that 80% of truck and bus tyres in the replacement market are nylon fabric tyres on which there's already an anti-dumping duty," said Singh. "Domestic industry started this campaign against imports way back in 2005.
In 2008, domestic industry went to the government and got restriction on import of truck and bus radials. This was lifted in 2010 after AITDA and truck operators pressed for it. But domestic industry still got anti-dumping duty imposed on truck and bus radial imports. In 2011, the imposition of anti-dumping duty on truck bus radial was struck down by customs, excise and service tax tribunal and domestic industry moved court. The matter remains sub judice even now," he added.
Tyre dealers say the reason for the spurt in imports is due to the fact that the imported brands now have the BIS certification required to sell in India. "In 2009, the government put in place the tyre quality control order so all locally made and imported tyres had to get BIS certification," said Singh.
Source:timesofindia.indiatimes.com
No comments:
Post a Comment