The All India Cycle Manufacturers’ Association (AICMA) on Thursday strongly urged the Centre to halt the dumping of cheap Chinese bicycles used for public bicycle sharing (PBS) schemes in India.
The All India Cycle Manufacturers’ Association (AICMA) on Thursday strongly urged the Centre to halt the dumping of cheap Chinese bicycles used for public bicycle sharing (PBS) schemes in India. It pointed out that there was a disturbing development of unfair competition from cheap Chinese bikes, cluttering urban landscapes on the back of artificial demand propped up by unregulated bicycle sharing apps in India. China’s two largest operators Ofo and Mobike are in competition with eight other local entities for the PBS market with the launch of 100 smart city projects in various phases. PBS is unique where users are able to hire a bicycle for short-distance travel, thus letting it be shared between several users in a day.
“What’s of concern (apart from the real threat of mass unemployment and loss of business) is the fact that the playing field becomes very uneven and unfair when heavily subsidised products flood a market that’s attempting to usher in safety standards and healthy practices,” said Pankaj M Munjal, Hero Cycles chairman, and a senior official of the association.
In a memo, the association has urged the Union ministry of housing and urban affairs to issue tender guidelines to all urban local bodies for the use of Made-in-India bicycles in PBS in line with the ‘Make in India’ circular of DIPP. The department of revenue should impose 60% import duty on PBS units, the memo added. According to Munjal, heavy government subsidies on Chinese production have ensured that China retains comparative advantage in global trade.
Dumping of products could cause accumulated losses to 4,000 small and micro units and potentially put the employment of its million-strong workforce in jeopardy, he added. The government’s ‘Make in India’ policy also necessitates an executive intervention, he said. The estimated demand in public and private PBS units in India would be around two million in the next 3-5 years. This is estimated to displace around 40 million retail ‘Made-in-India’ bikes from the domestic market in 3-5 years (on the assumption that each PBS bike replaces around 20 retail bikes).
PBS is already in place in Mysuru, Bhopal, Coimbatore and Pune and is in the pipeline in many cities.
At 16.5 million bicycles produced last fiscal alone, India is the second-largest bicycle manufacturer in the world with 4,000 micro and large units in operation, reporting an annual turnover of `6,000 crore. It provides employment to 1 million workers across the value chain with 11 crore bicycle users on record.
PBS was slowly evolving globally until 2014, when Chinese entrepreneurs popularised a dockless version, in which an individual needs to only download a smartphone app, make an online payment, locate and unlock a bike with an RFID chip and after finishing travel, leave the bike where the ride ends after locking it again. Conceivably, this format brought much convenience to the user but left him/her no incentive to leave the bicycle in an appropriate parking space.
By June, 2017, China had notched up more than 200 million riders. But it became clear very soon that this ‘Park Anywhere’ policy, unregulated operation and the backing of venture capital from leading tech/internet companies were leading to Chinese bicycle manufacturing feeding the PBS market exclusively and creating unsustainable excess capacity in the industry.
Eventually, this trend turned into a big public nuisance. Heaps of used PBS bikes became a common sight in China. The Chinese government has decided to regulate this untenable operation and PBS growth rate in China is expected to fall from a whopping 735% in 2017 to a meagre 32% by 2019. All but the two largest PBS operators in China went bankrupt. The huge unused inventory and excess capacity and continued huge funding led operators such as Ofo and Mobike to explore opportunities in other countries, including India, the association pointed out.