Demonetisation effect? Import of cheap tyres from China down 30 per cent

Published on : March 21, 2017 Topic : Business

KOCHI : India’s Rs 50,000-crore tyre industry must be thanking demonetisation. According to industry estimates, imports of low-quality truck and bus tyres from China have come down drastically post demonetisation. Earlier, the imports were around 1.3 lakh tyres a month, which came down to less than one lakh.

“Tyre imports in India have come down significantly. Small private operators have been dominating the tyre imports business in India mostly using unscrupulous trade practices. The sale of such tyres has been taking place on cash basis thus depriving the state of its revenues.

Demonetisation sucked out the cash from the system thus dealing a body blow to illegal import and its sale, which was purely cash-driven.

However, there is a legitimate concern that such imports will make a comeback with remonetisation unless effective measures are taken to prevent dumping of tyres,” said Rajiv Budhraja, director-general, Automotive Tyre Manufacturers Association.

Truck and bus radial (TBR) tyres have been the fastest growing segment for the tyre industry accounting for two-thirds of the Rs 35,000-crore investments made in recent years.

It accounts for 55 per cent of the tyre industry’s revenues in India. Currently, China accounts for 90 per cent of the total TBR import in India.

Chinese imports were 1.97 lakh tyres (40 per cent) in 2013-14, which was increased to 5.53 lakh (70 per cent of total imports) in 2014-15. It has increased to a whopping 12.86 lakh units in the following year, accounting for 90 per cent of total imports.

China’s share in TBR import in India has gone up to an unprecedented 95 per cent in 2016-17 so far.

“Cheap Chinese imports were a major concern for the domestic industry. The trend was strong enough to take on Indian manufacturers as finished tyre from China was cheaper by 30 per cent.

But, demonetisation has played a big deal in reducing the imports as the segment mostly deals with cash,” said John Devadason, unit head - Chennai, Apollo Tyres.

Source: The New Indian Express
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