Mumbai, Oct. 13 Tyre exports this year are heading towards negative territory largely due to the increasing competition from Chinese manufacturers in the traditional markets of Indian tyre makers.
Tyre exports, which clocked a total turnover of Rs 3,000 crore last fiscal, are set to fall by 10-12 per cent, according to Mr Rajiv Budhraja, Director-General, Automotive Tyre Manufacturers’ Association (ATMA).
“What is happening is the traditional export markets for Indian companies have been overcrowded by Chinese tyres. The international market is becoming increasingly challenging for Indian tyre companies,” he told Business Line.
Late last month, the US imposed a 35 per cent tariff on Chinese tyres to protect the American tyre industry. With the US markets (China’s third largest export destination) turning unfavourable, Chinese manufacturers would be more aggressive targeting other markets.
Well before the US’ impost, Chinese tyre exporters unleashed a price offensive against Indian companies in their traditional markets such as West Asia, Latin America and South-East Asia, according to industry representatives. As a result, from April to July, India exported 15.88 lakh tyres against 20.42 lakh previously, a decline of 22 per cent.
Another reason attributed to the fall is the slowdown in the global automotive industry.
“Since the industry is going through a downturn, the size of the pie for tyre makers remains the same or is shrinking,” Mr Budhraja said.
Tyre importers and distributors cut down their volume of business in many markets as the cost of finance has gone up, he said. More importantly, each country is trying to help domestic manufacturers. For example, the import restriction on Chinese tyres by the US has not been seen by the Indian companies as an advantage for them. “Exports cannot be ramped up all of a sudden as they are governed by long-term contracts. In addition, the first advantage goes to US domestic tyre companies,” he said.
The Government, under the new Foreign Trade Policy, has granted additional concessions for tyre exports to countries included in the ‘Focussed Market Scheme’. As many as 26 markets are added in the list. “We welcome it, but it is a bit late and it would take time to reflect in the market,” Mr Budhraja said.
Source : Business Line