Players in the unorganised small scale sector having around 10 per cent of the total market share of the ball bearing industry produce mainly low quality bearings used in the replacement market. It is this sector which has been hit hard by the smuggled products.

These smuggled products are said to be primarily from China and Japan as these countries have huge ballbearing capacities built over the years to meet the rising demand in the Southeastern region. However, with the countries in these regions have been hit by the economic crisis since 1997-98, global manufactureres are targetting India asthe destination for their products, majority of which are being dumped in the local markets.

Industry sources say the smuggled ball bearings are 15-20 per cent cheaper than Indian products, which makes it difficult for the latter to compete and take advantage of the improving economic conditions and sentiments. The domestic ball bearings sector is burdened with a excise component of 16 per cent in addition to sales tax and other levies (around 10 per cent).

Import duty on ball bearings has reduced across the board, which has made the imports attractive. However, industry players are disturbed by the game of underinvocing played by the big players and traders of this industry in large scale.

Given the uptrend in the industrial climate, the annual growth targetted by the ball bearing industry for 1999-2000 is said to be around 10 per cent. However, this development has begun hitting the local ball bearing makers severely which has been hit hard during the prolonged three-year recession-like situation inthe country.

Just when the things have begun improving -- increased demand from cross section of the industry, including the automobiles, textiles and others - the local players are to fight the menace of underinvoiced smuggled goods. However, because of the severe competition, majority of these are unable to resort to increase their prices.

According to NRB Bearing wholetime director Harshbeena Zaveri, "domestic manufacturers can compete against normal duty imports, but it is difficult to compete against the smuggled and underinvoiced products, as they are cheaper by around 20 per cent".

NRB Bearings, claims to have 60 per cent of its sales targetted for the fast-growing two and three-wheeler industry and 15 per cent each for passenger car and tractor industry.

Even when the overall input costs have gone up considerably, the smuggling and underinvoiced ball bearings prevent the local manufacturers from increasing the prices. Hardly any manufacturer, if any, have ventured to increase the prices oftheir products, and that too even marginally.According to available information, only Tata Timken and couple of others have earlier ventured to increase the prices of their products by around 1-2 per cent. Others have not ventured to increase the prices, more so at a time when the domestic ball bearing industry is gearing up to meet the rising demand.

Interestingly, the down trend in the steel prices have come as a boon to the beleagured ball bearing industry, which has helped the ball bearing makers average out with the rise in other costs. Given the competition, both from the local makers and the global supplies, through the smuggling route, it is unlikely that the local players will be able to venture with higher prices.

NRB Bearings plans to spend more on research

NRB Bearings plans to spend around 4 per cent of its sales turnover for research and development during the current year. This will help the company take on the challenges of the next millennium, both from the local as well as theglobal markets.

The new product improvement and the research and development plan at Thane is claimed to be the first in India for this type of the product.With the overall improvement in the manufacturing process through cost cutting methods adopted during the lean periods, the company aims at more than doubling its exports to around 10 per cent by 2000.

In order to meet the global competition, the company has got all its plants in India certified for ISO 9002 and is preparing currently for QS 9000 certification.

The company, incorporated in 1965, is an Indo-French joint venture with Nadella of France. It claims to have pioneered the production of needle roller bearings in the country.

According to Zaveri, R&D efforts are aimed at automating production and handling process which would improve overall productivity by reducing the requirment of manpower and speeding up the manufacturing process. There will be lower rejection or rework in the plant, which will improve the quility product.

Further,Zaveri said that in addition to focus on the export markets, the companyintends to increase focus in meeting the rising domestic demand, particularly in the replacement market and original equipment manufacturers (OEM). Net sales increase in the replacement market has gone up to 47 per cent from 28 per cent in 1997 of net sales.

Lastly, the company's sales has declined in the OEM auto sector from 66 per cent in 1997 to 46 per cent currently, that is a reduction of 20 per cent. One of the main reasons for this is the slowdown in the automobile industry which had led it to shift its focus in the other markets.