Domestic Radial Capacity, Import Duties a Problem for Indian Vehicle Makers

It appears tyre manufacturers in India do not see eye to eye with the country’s vehicle manufacturers on the subject of anti-dumping duties. These tariffs, introduced in January and applied to imports of radial tyres from China, have been criticised by major automakers such as Tata Motors and Ashok Leyland, who say plans to expand have been affected by a shortfall in commercial vehicle radial capacity within India.

“There is a shortage of all components and not just tyres, between at least five and ten per cent,” Ravi Pisharody, senior vice-president (commercial vehicles), Tata Motors told the Hindustan Times. “We are in consultation with component suppliers and tyre companies and hopefully we will be able to find a solution before the start of next fiscal (April 2010).”

Tyre makers, on the other hand, see the duties as levelling the playing field. The Hindustan Times reports Apollo Tyres managing director Neeraj Kanwar as citing the US restrictions on Chinese tyres as a trigger for dumping of these products into India. “It is a fact that the Indian customer does not want a Chinese radial, which has a dodgy track record,” said Kanwar.

India’s level of commercial vehicle tyre radialisation sits at five per cent, comments the paper. The only manufacturers producing commercial vehicle radials in India are MRF, JK Tyre & Industries and Apollo Tyres, the last of which has recently completed its new truck tyre radial plant. Bridgestone will also soon begin producing radials in India. The world average is given as being 65 per cent, with China even higher, at 70 per cent. This low level of radialisation in India presents an obvious problem. Dilip Chenoy, director-general, the Society of Indian Automobile Manufacturers, said a significant shortfall of capacity for truck and bus radials exists. “The domestic industry has not expanded in line with demand and with restrictions being imposed on imports as well, what option does the automobile industry have?”

Indeed, this is the very question vehicle manufacturers are asking: Tata Motors already imports tyres from China while Ashok Leyland is expected to join soon. “We do import components from China and the quantum is only going to go up,” said R Seshasayee, Ashok Leyland managing director.