Tyre companies smell rat in 60% import surge

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Thiruvananthapuram | Updated: May 30, 2015 10:48:39 AM

With a near 60% surge in the import of truck and bus radial tyres in FY15 and China accounting for 70% of them, the Automotive Tyre Manufacturers’ Association (ATMA) feels it’s a concerted effort by the neighbouring nation to dump tyres in India.

Tyre industry in indiaRaising an alarm, the Automotive Tyre Manufacturers’ Association (ATMA) shot off a letter to the commerce ministry, saying this seem to be a ‘concerted move’ to dump radial tyres in India and blunt the country’s edge in technologically superior radial tyre manufacturing. (Reuters)

With a near 60% surge in the import of truck and bus radial tyres in FY15 and China accounting for 70% of them, the Automotive Tyre Manufacturers’ Association (ATMA) feels it’s a concerted effort by the neighbouring nation to dump tyres in India.

Raising an alarm, ATMA shot off a letter to the commerce ministry, saying this seem to be a ‘concerted move’ to dump radial tyres in India and blunt the country’s edge in technologically superior radial tyre manufacturing.

“Indian tyre industry has invested nearly R20,000 crore in manufacturing state-of-the-art radial tyres in the last 3-4 years. However, a significant capacity is lying underutilised as the demand is met from the imported radials, largely from China,” ATMA said in the letter.

Truck & Bus Radial tyres (TBRs) that account for a significant part of the new manufacturing capacities put in by tyre manufacturers have seen a significant jump in imports.

TBR imports are up 60% from 4.9 lakh tyres in FY14 to 7.8 lakh units in FY15. About 25% of the domestic replacement demand for TBRs is met from imported tyres, says ATMA.

“Tyre industry has been promoting radial tyres in commercial vehicles for its fuel efficiency and safety, and has invested heavily so as to remain ahead of the demand curve. However, imports of tyres have been taking place indiscriminately and at low prices, which in cases of Chinese imports, are even below the cost of raw material. This is causing injury to the domestic tyre manufacturers,” said ATMA chairman Raghupati Singhania.

Import of TBRs from China has trebled from 1.9 lakh tyre units in 2013-14 to 5.5 lakh units in 2014-15, and China accounts for 70% of the total TBR imports by volumes in India. TBRs were imported in India at reduced process in FY15 compared with last fiscal with TBR imports from China being the cheapest.

Since the tyre industry is highly capital intensive, imports not only threaten new investments but also imply huge loss of jobs. According to ATMA, huge surplus capacities in China are abetting dumping of tyres in India. For instance, in case of TBRs, China’s manufacturing capacity is 120 million units while its domestic demand is 60 million units, producing 100% surplus. The surplus capacity is diverted to countries as evident in the significant share of China in total imports in India.

The export prices of TBRs from China are significantly lower than the prices of such tyres in Chinese domestic market and also prices of similar imports originating from countries in the same region such as Thailand. This clearly indicates dumping of tyres into the Indian markets, ATMA argues. It is not the actual users who are importing truck and bus tyres. On the contrary, small traders and importers have been resorting “to various unfair trade practices such as underinvoicing or wrong classification of product category,” says Singhania in the letter. This would not only vitiate the market but cause considerable loss of revenue to the government, he adds.

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