NEW DELHI: Indian tyremakers are rolling out investment plans worth Rs 6,000 crore, as rising popularity of radial tyres in the commercial vehicles (CV) segment is making international brands sit up and take notice.
Currently, after a ban on Chinese radial tyres, only two international players — Michelin and Bridgestone — have a stake in the $10-million domestic market, but that’s set to change with the expected entry of companies such as Goodyear, Continental, Kumho, Pirelli, Yokohama and Hankook in the high-profit truck and bus radial tyre segment this year.
Incidentally, India’s CV segment remains a weak spot in the auto industry, with sales dipping 33% to 1.83 lakh units in FY09. And the search for more bang to the buck is making consumers move towards high mileage, fuel-efficient radial technology from the conventional cross-ply technology. As of now, radials make up only 9% of the Indian CV market against the world average of 65-70%. The industry estimates it to grow to 25% in the next three years.
“Indian companies are working on plans to compete against the rising import of foreign tyres by increasing the domestic radial tyre production as well as improving product quality,” said Automotive Tyre Manufacturers’ Association (ATMA) chairman RP Singhania. As per ATMA, Indian truck and bus tyremakers have lined up Rs 6,000 crore investments for greenfield facilities and for increasing capacity at existing plants for new-age tyres.
Mr Singhania, who owns JK Tyres & Industries, is investing Rs 700 crore at its Mysore plant to enhance truck and bus radial capacity to 12 lakh tyres from 3.68 in the next three years. Birla Tyres is setting up a dedicated CV radial plant and Apollo Tyres, a fringe players in the radial segment, has set up a new truck and bus radial plant at Baroda. Kolkata-based Dunlop Tyres is also entering the radial tyre segment, while MRF is investing Rs 600-Rs 800 crore to increase capacity across its product portfolio.
These investments come on the back of the government’s restrictions on imports of Chinese tyres late last year. The government has also come up with a rule that every importer of tyres must have a licence. Every month, over a lakh CV radial tyres were coming from China, but after this diktat, only MNC companies are importing 70,000-80,000 radial tyres. Japanese tyremaker Bridgestone and French tyre company Michelin import CV tyres in small quantities. Goodyear, Kumho, Yokohama, Continental, Hankook and Pirelli, which import car tyres and have established distribution network, now plan to tap the high-margin CV tyre market.
“There is massive shift towards radial tyres with the dual-benefit of better mileage and improved fuel-efficiency over the conventional cross-ply tyres. Like cars, 97% of which use radial tyres, the bus and truck segment will also witness a major shift in the next few years and foreign companies are likely to have a major pie,” said ATMA director general Rajiv Budhiraja.
Source : The Economic Times