China is “dumping” its low quality tyres on the Indian market, a trend which is facing much opposition from Indian manufacturers. The low import duty on Chinese firms has facilitated Chinese suppliers to sell tyres at competitive prices that might not be of as good quality as Indian tyres. However, the dilemma that Indian manufacturers are facing is that Indian buyers prefer to buy lower quality cheap Chinese tyres over Indian ones.
On the sidelines of the rolling out of the 10 millionth truck radial tyre in Mysore, Raghupati Singhania, CMD, JK Tyres, said, “Chinese ‘dumping’ of their tyres is a nuisance for the Indian market. Chinese manufacturers have been increasingly dumping their product for the past three years in particular and have taken over the amount of imports in the country. The imports in our sector have gone up by 50% over the last year. I don’t want to be misunderstood. We are not against open markets and certainly not against imports or market-oriented economy, but we certainly don’t like to be a market where tyres can be dumped. In the US, anti-dumping duties were done away within 4-5 months, but here in India, it has been 16 months and our anti-dumping regulation has not reached anywhere. We have to wait and see what is happening.”
In May this year, the government finally initiated a probe into the dumping of certain radial tyres from China that are used in buses, lorries and trucks, after the Automotive Tyre Manufacturers’ Association (ATMA) filed an application on behalf of domestic players like JK Tyre, Ceat and Apollo Tyres for the initiation of an anti-dumping investigation and imposition of duty on imports, following which the Directorate General of Anti-Dumping and Allied Duties (DGAD) had found “sufficient prima facie evidence” of dumping of these tyres from China and started investigations that have not been concluded yet.
Rakesh B. Jha, an industry expert, pointed out that buyers of made-in-China tyres generally belong to low income groups. Jha said, “These buyers are looking for a quick fix. They don’t want to buy a tyre that crosses the Rs 10,000 mark. You can easily buy cheap tyres online for Rs 2,000 as well. But then, you get what you pay for. These cheap tyres consume more fuel, are used for short distances and higher load transportation and in multi-axled trucks, where the tyre is not as critical to the overall performance of the vehicle. Awareness among Indian consumers on why buying a good quality tyre is important has been low.”
Jha added, “Not all tyres that are made-in-China are junk. China manufactures high, mid as well as low quality products and then it targets overseas markets according to their socio-economic feasibility.” Some tyre manufacturers in India have also tried to match the competition from China by selling low priced tyres with zero warranty. However, their success rate is not good enough to get China-made tyres out of the market.
According to data from ATMA, raw material costs of both Indian and imported tyres are the same. Truck and bus radial (TBR) imports have more than doubled from 490,601 units in 2013-14 to 1,308,437 units in 2015-16; TBR imports as a percentage of replacement demand have grown 18% in 2013-14, 24% in 2014-15 and 39% during April-October this fiscal. According to ATMA, 90% of all TBR imports in India now come from China, sharply up from 40% two years ago. The other countries from where India imports tyres are Thailand, Spain and Japan.
Of the total Chinese imports, less than 30% is imported by vehicle manufacturers and tyre companies. Chinese TBRs have replaced the lower-end domestic truck bus bias (TBB) segment as they are 10-15% cheaper than the latter and at least 30% cheaper than domestic TBRs.
Singhania said, “As a country, I believe that we have to learn to act faster. And it is not right to think that a demand to impose higher duty on China imports is to singularly protect Indian players. It is about saving your turn and provide a fair and level playing field for all players in the market. If anti-dumping rules are enforced, the 40% market share dominated by the Chinese market won’t vanish and become zero. At best, it will only come down by 10-15%. Anti-dumping is a word suggested only for those players who are literally dumping their products in the market. The other foreign players who are selling products on average prices will continue to do so.”
Singhania added, “The relief that we are seeking hasn’t come to us yet. We hope that our cause is taken forward by the media so that the government can listen to us and understand our need.”