According to Automotive Tyre Manufacturers Association, inflationary pressures in the domestic arena and lower import duties have boosted import of tyres from China, which comes at a much cheaper price compared to Indian tyres.
According to Automotive Tyre Manufacturers Association, tyre supplies from China mainly radials would grow multi fold to 1,530,000 tyres by the end of this financial year from just 15,600 tyres imported in 2001-02. Additionally, Chinese share in total imports will increase to 82% this year from just 29% seven years ago. As of today, India is the third largest importer of cheap Chinese tyres globally.
Due to the onslaught, Indian tyre makers including MRF, JK Tyres, Apollo and Ceat, which have been facing steep input prices have lost shares in the domestic market to cheap Chinese tyres. Chennai based MRF, India’s largest tyre maker said that it has lost about 15% share of the domestic market to Chinese players. The company has further clarified that it would not be feasible for them to cut tyre prices to match the competition due to increased costs.
To highlight the prevailing difference in pricing, a pair of radial tyres made in China costs INR 24,000 to INR 25,000 in India, even after adding relevant import duties, this is 28% cheaper than Indian tyres, which are priced at INR 31,000 to INR 32,000.
Mr RP Singhania chairman of ATMA and JK Tyres said that “Being a raw material intensive product, the impact of input cost increase on tyre industry, particularly in the last 18 to 24 months has been significant. Also, the tyre market is facing the challenges of demand slowdown coupled with significant increase in tyre imports with a substantial percentage of such imports from China being dumped into the country. For the budget 2009-10, our foremost request is for rationalization of customs duty on key raw materials to increase competitiveness of the industry.”
Chinese companies has been able to sell radial tyres at lower rates in the Indian market because of the very low cost of manufacturing in that country and also due to under voicing the imports and selling them without paying the required value added tax here. In addition China has huge capacities of radial tyres.
ATMA has asked for anti dumping investigations and imposition of duties on China on import of radial tyres. India had imposed a similar anti dumping duty on bias ply tyres in June 2007.
Experts said that prices of raw material in China has remained unaffected despite a surge seen in India recently, enabling them to produce tyres at cheaper costs.
Source : Stellguru