Replacement market for truck and bus tyres in India is reaping benefit from restriction on import of cheap radial tyres from China. Consequently, even while the commercial vehicle sales have declined by 12.8% in the domestic market and 42.4% in overseas markets in the first quarter (April-June), the tyre industry has managed to fare well and has remained flat vis-a-vis first quarter of 2008-09, which has been one of the best quarter for the industry.

According to the Automotive Tyre Manufacturers Association (Atma), while sales of truck and bus tyres remained at nearly 11 lakh units a month between April and June this year, sales of passenger car tyres declined by 1.4% at 13.8 lakh tyres a month as compared to average monthly sales of 14 lakh tyres a month in the first quarter of last year.

Under the Foreign Trade Practices Act, import of radial tyres have been restricted against actual user licence since November last year as a result of which the import has come down from 1.3 lakh units earlier to a mere 30,000 to 35,000 units now. While bias tyres for commercial

vehicles (the older technology tyres, which are not radial) in

India cost between Rs 10,000 to Rs 12,000, those imported from China are available at Rs 8,000 to 10,000. Likewise, the imported radial tyres cost between 12,000 to 14,000 while the Indian radial tyres costs between Rs 14,000 and Rs 16,000.

?In November last year, the government had imposed restriction on import of cheap radial tyres from China which has helped to increase the sales of bias tyres in the country.

Moreover, though demand from original equipment manufacturers (OEMs) and global markets continue to be low in the first quarter despite the stimulus packages from the Centre, the better utilisation of existing vehicle population has helped increase demand from the replacement market,? says Rajiv Budhraje, director general, Atma.

According to Budhraje, share of replacement market to the total truck and bus tyre sales in the country has gone up from 60% in 2008-09 to 78% in the first quarter of the current financial year. On the other hand, share

of OEMs to total sales has come down from 13% in the last financial year to 10% during April-June this year and contribution of exports has also come down from 15% in 2008-09 to 12% now.

However, the advantages of restricted import from China seems to have had its impact as the sales are expected to be flat even in the second quarter vis-?-vis first quarter because of uncertain weather conditions, feels Atma.

?The second quarter looks very difficult for the tyre industry as weather related disruptions are now showing up. While excessive rains at some part of the country has hit the

movement of trucks, the drought conditions in other parts will impact demand in coming days,? says Budhraje, adding that it?s only when the infrastructure projects starts off in a big ways that there could be some hope for a spin off in the commercial vehicle category.