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India 3rd largest importer of cheap chinese tyres
June, 04th 2008

As Indian tyre manufacturers reel under the high prices of raw materials like natural rubber, crude oil and carbon black, they face a tough challenge from China even as its exports to India climbs multi-fold.

From 39th rank in 2002-03, India climbed to the third position last year, according to data provided by the apex tyre body, the Automotive Tyre Manufacturers Association (ATMA), which predicts India will be the largest importer of tyres from China in the near future.

During April-February 2008, Indian imports from China surged almost twofold to 1.2 million units, from 660,000 units in the same period a year ago. As of today, Chinese tyres command a substantial share of the 15 per cent of the replacement tyre market for trucks, pegged at Rs 7,800 crore. The Indian tyre market comprising tyres of cars, UV, OTR, trucks and buses, is worth Rs 20,000 crore currently.

The domestic tyre market consists of leading players like MRF followed by Apollo, Bridgestone, Ceat, JK Tyres, Michelin, Goodyear, among others.

Koshy Varghese, V-P (marketing), MRF, said: "About 15 per cent share of the after market, which could have been ours, has gone to the Chinese players. The imported tyres are allowed in the country freely and are sold at 30 per cent less than local tyre prices. The Indian buyer is attracted to Chinese tyres purely because of the pricing and not for technology. We cannot reduce our prices because of spiralling input prices."

An industry expert claimed that even though prices of Indian tyres cannot be lowered, the technology and quality of domestic tyre products are better than the Chinese tyres. "Even though the consumer is aware about quality issues of Chinese tyres, there will always be a demand for such tyres because of cost advantage."

In a presentation made by ATMA Chairman Raghupati Singhania, who is also the chairman of India's third largest tyre maker, JK Tyres, to the commerce ministry last month, the body pointed out that despite filing two petition against the import of Chinese tyres, little has been done so far.

The body has thus asked for anti-dumping investigations and imposition of duties on China for import of radial tyres. India had imposed a similar anti-dumping duty on bias ply tyres in June 2007.

Rajiv Bhudhraja, director general, ATMA, said: "The average price of a pair of Chinese truck tyre is about Rs 7,500, which is significantly lower than Indian prices which retail at about Rs 13,000-15,000. More than 100,000 Chinese tyres are imported every month, totaling to about Rs 900 crore yearly. More alarming is the fact that people have changed their perspective about products from China, which was once thought to be sub-standard."

China has been able to sell radial tyres at such lower rates to India because of the very low cost of manufacturing in that country, and also due to under-voicing the imports and selling them without paying VAT here. In addition, China has huge capacities of radial tyres, added Budharaja.

Indian tyre companies have just recently warmed up to the idea of radial tyre technology. Radials provide higher safety, increased fuel efficiency, better performance and ride quality than bias ply tyres.

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