Tyre dealers, companies at loggerheads

Written by Yogima Seth | Updated: Jun 1 2008, 05:16am hrs
The depreciation of the rupee vis--vis the dollar has brought tyre manufacturers and dealers at loggerheads over imports of radial tyres into the country. While the All India Tyre Dealers Federation (AITDF) is seeking the abolition of anti-dumping duty on bias tyres after the 10% depreciation of the rupee has made imports costlier by Rs 2,100, the Automotive Tyre Manufacturers Association (ATMA) wants the anti-dumping duty extended to radial tyres that are being imported.

Over the last eight to 10 weeks, the rupee has depreciated by 10% vis--vis dollar. This has resulted in an increase of Rs 2,100 in the prices of a pair of radial truck and bus tyres. Moreover, the existing anti-dumping duty on bias tyres has already hit imports. So, we want the import duty to be abolised to compensate for the impact of rupee depreciation on the import of latest technology radial tyres, says SP Singh, head, AITDF.

On the contrary, however, ATMA has proposed to the commerce ministry to impose an anti-dumping duty on radial tyres, similar to the one that exists on bias tyres. There has been a substantial increase in import of radial tyres which are dumped at the point of entry and are largely sold on cash basis without any tax imposed at the retail end. As such, margin of dealers are four-to-five times higher as compared to margins over imported tyres that are sold via proper trade channels, says Rajiv Budhraje, director general, ATMA.

According to industry estimates, tyres import has gone up from a mere 85,000 a year, five years ago, to around 1 lakh a month now. Over 60-70% of these are radial tyres as there is no anti-dumping duty on them.

Considering that around 85,000 tyres are dumped into the country from China and at least 70-75% of these are sold via improper channels, it is estimated that it costs the state exchequer Rs 60-80 crore per month. Hence, there is an urgent need to restrict the import of tyres into the country, adds Budhraje.

AITDF is also claiming that lack of latest technology and inadequate capacity with domestic manufacturers has led to a an increase in the import of radial tyres. Currently, domestic manufacturers have a total production level of 10.5 lakh tyres a month.