Indian Manufacturers Face Export Difficulties

While India is home to one of the world’s fastest growing tyre markets, when it comes to exports the countries domestic manufacturers are wary of being caught out on quality control and having to face “extreme” insurance claims.

According to the Financial Express newspaper, India exports 20 per cent of its annual tyre production and some of the country’s largest producers are still struggling to ramp up exports for various reasons, including “liabilities arising of defective products” – Indian manufacturers simply cannot afford to be involved in a large scale product recall in either the European or US markets.

The Indian tyre industry is comprised of roughly 40 tyre manufacturers that produce a total of 70 million tyres annually. This market is more of less dominated by the four largest players Apollo, JK, MRF and Ceat. MRF probably exports the most (35 per cent) while JK comes next with 20 per cent, followed by Ceat (14 per cent) and Apollo Tyres (8 per cent).

The UK and the US are regards as being particularly demanding markets, with maintaining safety standards, high brand profile and competitive pricing seen as particular challenges. “Products need to be covered by product liability insurance globally as accidents can take place and in the developed markets law suits can sometimes be worth millions of dollars,” Rajeev Kakkar, general manager exports JK Industries, told Financial Express.

Compliance with the European ECE and US DOT standards are seen as further challenges for Indian manufacturers. European noise emissions testing requirements were singled out as a particular demand requirement. (By 2009 all tyres sold in Europe will have to pass European noise emission tests).

In order for Indian manufacturers to succeed in the respect, “foreign tie-ups are becoming critical for market access,” the newspaper explains, citing Apollo Tyres’ acquisition of Dunlop Tyres International, as a particular example of this.

“With the acquisition of Dunlop, we will get greater access to the European and Australia markets which are tech savvy markets. We are focussed on radialisation as that is the growth area of the future,’’ Neeraj Kanwar, Apollo Tyres’ joint managing director, told the Financial Express.