Mumbai: Imported Chinese tyres were a threat to domestic tyremakers until October last year. In November 2008, the government put radial tyres under the 'restricted imports' list and allowed only licenced players to import radials.

An year later, it seems the move was no deterrent for Chinese radial tyres to abound in India, but under a different garb-- 'bias tyres'.

According to Rajiv Bhudhraja, director general, Automotive Tyre Manufacturers' Association (ATMA), the vast unorganised sector, which comprises 80% of the total tyre market, continues to import radial tyres from China, but these are now being falsely labelled as bias tyres. "This poses a threat for the Indian tyremakers once again," Bhudhraja said.

Until October 2008, India imported 1 lakh tyres, out of which 80% were radial tyres. Chinese importers, until last year, accounted for 90% of the total imports.

Bhudhraja said, "Chinese onslaught is severe enough to wipe out our market. The share of Chinese tyres in the replacement market was less than 1% four years back. Now it is close to 15%."He said the potential loss of the market in terms of sales due to Chinese imports will be around Rs 700 crore.

As per ATMA data, India imports 50, 000 China-made bias tyres. However, only 15,000 radial tyres are imported by licensed vendors.Bhudhraja said nearly 10,000 Chinese radial tyres are imported by our unorganised sector under the false label of 'bias tyres.' In fact, tyremakers and large transporters have now altogether stopped legal imports of radial tyres from China.

To mend this loophole, ATMA has requested the government to now put even bias tyres in the 'restricted imports' list.

"Technically, there is an anti-dumping duty of $135.65 on imports of bias ply tyres, but as it's not listed under the restricted category, the provision is misused by the organised segment," Bhudhraja said.He said ATMA's request to levy an anti-dumping duty on radial tyres is still pending with the government, which is also hitting the domestic tyre market.

Revati Kasture, head -- industry research, Credit and Research Analysis Ltd, said, "What makes Chinese tyres attractive over domestic tyres is the price differential of nearly 30%.

Indian truck and bus radial tyre costs around Rs 16, 000, but a Chinese radial tyre costs only Rs 12, 000."

Kasture added that the price differential arises primarily due to under-voicing, dumping/low export price of goods originating from China.

"Though the prices of key raw materials like natural rubber, synthetic rubber, nylon fabric, rubber chemicals move in tandem with the domestic and international markets, some other costs factors (interest, depreciation etc) are not fully reflected in the Chinese products' price/cost, which largely explains the difference between the manufacturing costs in India and China," she explained.

Neha Rishi

Saturday, March 28, 2009 2:42 IST

Source: www.dnaindia.com