Indian Tyre Exports Decrease 12% Between April & December

A marked decline in vehicle sales worldwide together with tighter import restrictions in some countries is being blamed for a 12 per cent decrease in tyre exports from India in the last three quarters. According to India’s Automotive Tyre Manufacturers Association (ATMA), Indian tyre companies exported 2.346 million tyres between April and December 2008, compared with 2.668 million during the same period of 2007. This drop in exports occurred despite a devaluation of the rupee against the US dollar and numerous other major currencies.

The downturn was most pronounced in the truck and bus tyre segment, which experienced a 16 per cent decline in exports from 1.865 to 1.563 million units between April and December. A more modest 2 per cent drop occurred in the passenger car tyre segment, with exports of 783,000 tyres compared with 803,000 a year earlier.

Import tariffs are thought to be a major contributor to these lower export figures. “Due to high import tariff in Malaysia, Vietnam, Indonesia and Thailand, Indian tyre exports are not competitive,” ATMA director general Rajiv Budhraja told India’s Business Standard newspaper. “At the same time, these countries are high growth markets in terms of production and consumption.” Additional factors are also believed to have contributed, including a build-up in inventory in cheaper manufacturing countries, such as China.

“About 20 per cent of our production is exported as of today, but we have seen a drastic fall in demand from markets like West Asia, Africa and Latin America,” added Ceat sales and marketing vice president Arnab Banerjee. “These markets deteriorated much earlier and faster than the Indian market. Although the current quarter has been better so far, compared to the earlier quarters, we will not post any growth in net profit for the full financial year.” ATMA figures indicate that Ceat exported Rs 4.12 billion (US$79.38 million) worth of tyres from India between April and December 2008. Its market share stood at 23 per cent from the industry total of Rs 1.806 billion (US$347.98) for the reported period.

To counter the slowdown in exports, the ATMA has requested tax concessions and incentives that will level the playing field between Indian and Chinese manufacturers, and help Indian companies remain competitive in export markets. Measures suggested by tyre industry include reducing the interest rate for pre-shipment credit to 6 per cent (equivalent to that in China) from the existing 10-11 per cent.