Tyremen in panic as exports tumble 16%, seek sops-parity with China

Written by M Sarita Varma | Thiruvananthapuram | Updated: Feb 25 2009, 05:47am hrs
Amidst the domestic auto sector slowdown, shrink in truck and bus (T&B) tyre eyports - the premium export segment - has left Indian tyre industry riding a panic wave. T&B accounts for as much as 40% of truck exports from India.

In the first three quarters of 2008-2009, T&B tyre exports have fallen by 16%. Against an export of 18.65 lakh T&B tyres during April-December 2007, the exports fell to 15.63 lakh during the corresponding period in current fiscal.

Automative Tyre Manufacturers' Association (ATMA), which confirms the B&T tyre exports plunge, says that situation has been compounding in January and February.

The shrink in global demand has been equally bruising to China as well as India. But China has been faster on policy responses. Effective December 1, 2008, China has announced revised export tariff rebate rate on rubber products, including tyres.

"Benchmarking Indian tyre exports' taxation and incentive structure to that of China is urgently needed, according to Rajiv Budhiraja, Director General. ATMA has been knocking the ministry of commerce doors seeking a slew of measures to reverse export volumes fall. But the Centre's Vote-on-Account has not addressed this issue at all.

"Share in world market may not wait patiently till July while India goes through its polls and change of guard. Once lost, the export market is very tough to recapture. In China, administrative reflexes worked fast. India too should follow suit," he told FE.

ATMA has urged the ministry of commerce for the following measures:

1) Reduce interest rate for pre-shipment credit to 6% (equal to that of China) from the existing 10-11%; 2) Abolish value cap in respect of tyres. The current value cap is Rs 90 per kg f.o.b value. As the present input cost for tyres exceeds $2 per kg. With dollar at Rs 50 even the input cost exceeds the value cap. Tyre exports under DEPB scheme will not benefit due to limitations. So value cap should go; 3) Under `Focus Market' scheme, countries like Egypt, Kenya, Tanzania, Nigeria, Brazil, Saudi Arabia, Yemen, Iran, Iraq, Kuwait, Qatar, Syria, Malaysia, Vietnam, Indonesia and Thailand should also be included.

Indian tyre industry argues that tyre exports from India to these hand-picked countries in Asia Pacific could increase significantly, but for the high import tariff. Import tariff on tyres in Malaysia, Vietnam, Indonesia and Thailand is 40%, 40%, 15% and 15% respectively against India's import tariff of 10%. "Since these countries are high growth markets for tyres, Indian tyres could regain a competitive edge if Indian government could compensate the differential of import tariff between India and these countries," says ATMA memorandum to government.