India imposes duty on Chinese and Thai non-radial tyres

29/03/2013 12:00 - 535 Views

The Indian Finance Ministry has imposed anti-dumping duties on cross-ply tyres from China and Thailand. According to the revenue department, these duties will be in place for at least five years. As a WTO strategy to protect the domestic industry against cheaper imports, anti-dumping duty will also be implemented on some tubes and flaps. Thai imports will see an anti-dumping duty of $0.86/kg. For imports from China, the anti-dumping duty is to be $1.12/kg for tyres produced by Hangzhou Zhongce Rubber Co. Ltd. The anti-dumping duty has been fixed at $1.31/kg for all other Chinese imports. The radial imports that have swamped the market certainly have a negative impact on the domestic industry that has to compete with the competitive prices and unfavourable regional trade agreements.

With a booming automobile industry and a huge demand for commercial vehicle tyres, the Chinese products with their competitive prices have flooded the Indian market. “Tyres imported from China are 20-25% cheaper than Indian tyres. In an oligopolistic tyre market controlled by a few companies, we are witnessing a massive increase in import of cheaper Chinese tyres into India, which is growing by 200 percent”, says S.P. Singh of the All India Tyre Dealers Federation. According to Vikram Malhotra, VP of marketing and sales for JK Tyres, Chinese car tyres have appropriated a nearly 20% share in some areas. The move has helped the domestic tyre industry regain profits. Chinese imports have infiltrated the radial tyre market as well with a 20% price difference for bus and truck radials and a 30-35% difference for car tyres. Chinese tyres currently account for 70% of imports in the truck and bus sector.

It has been difficult for domestic manufacturers to combat the rising input costs with unfavorable trade pacts and the steady rise in the market for Chinese imports. India’s regional trade agreements with countries such as China and Korea have enhanced the price competitiveness of imported tyres.

The higher duty levied on raw materials and the lower duty on the final products is obviously not helping the domestic tyre industry. Rajiv Budhraja, director general of Automotive Tyre Manufacturers' Association, said, "Though the import duty on tyres is 10%, it's 8.6% for China because of the Asia Pacific agreement. Imports are mostly by independent traders. Previously, OEMs used to import too". Satish Sharma, chief of India operations for Apollo Tyres, believes that the Chinese tyres are of an inferior quality and therefore raise the issue of safety. But with the availability of these substantially cheaper Chinese and Thai tyres, the domestic companies are unable to pass on the price of the rising input costs to the buyers.

Chinese tyre manufacturers are expected to continue their penetration into the Indian market owing to large scale economies and good cost structures and will continue to be lively competition for Indian tyre companies. According to ICRA estimates, the imports in the truck and bus radial tyres segment are expected to continue for the next two years. Though by 2013, the domestic capacities are also expected to increase and be free from many constraints.

March 29, 2013

Source: indiatransportportal.com