The first two months, April to May, of the current financial year in India saw a 57% surge on the imports of truck and bus radials. For Indian tyre makers, this situation is made complicated by the fact that they spend Rs250 billion (Rs25,000 crore) on capacity creation in the recent past.
According to the Automotive Tyre Manufacturers Association’s (ATMA) data, the import of truck and bus radial tyres (TBR) during April and May grew to 280,000 units, compared to the 180,000 imported in the corresponding months of 2015-16.
In May, import of TBRs was 150,000 units, almost 40% of the replacement demand for these in a month. TBR import had also gone up by 60% in 2014-15 and 64% in 2015-16, a total swelling over two years of two and a half times. From an average monthly import of 40,000 units in FY14 and 65,000 in FY15, these crossed 100,000 units a month last year.
As the truck and bus tyre segment is the single largest category, 55% of industry turnover, this “indiscriminate import and dumping” has a seriously adverse impact.
“There has been no let-up in dumping of tyres from China. Capacity utilisation levels in the industry have come down significantly over years,” said ATMA chairman K. M.Mammen.
China is currently dominating the TBR import sector in India, to an unprecedented 90% last year, from 40% in 2013-14 and 70 per cent in 2014-15. A Chinese truck or bus radial costs US$140-150 (Rs9,400-10,000) in India, around 30% lower than an Indian tyre costing Rs15,000.
ATMA alleges that the TBR export prices from China are significantly lower than the prices of such tyres in the Chinese domestic market, and the prices of similar export originating from Thailand and South Korea. The per-unit import price from China is, in many cases, less than the cost of raw materials in India.
“Tyre manufacturers in India have made major investments to the tune of Rs25,000 crore towards creating new capacities for manufacturing of state-of-the-art truck and bus radials, in view of rising radialisation in (this segment). The indiscriminate import and dumping are seriously undermining domestic manufacturing,” said Mammen.
The uptick in radial demand is in sync with an equal rise seen in demand for medium and heavy trucks and buses. This was 302,373 units last year, against 232,755 in 2014-15, according to data from the Society of Indian Automobile Manufacturers.