Dumping of tyres into India particularly from China has seriously impacted domestic production, turnover of tyre manufactures and export of tyres from India in FY 2015-16. This has put a question mark over the massive capacity explansion planned by tyre majors in India
In spite of the hue and cry raised by the Indian tyre industry over the adverse fallouts of indiscriminate import of tyres into India, the country’s import of truck and bus radial tyre (TBR) jumped by as high as 64% to 1.28 million units in 2015-16, from 780,000 units in the previous fiscal. At the same time, exports of tyres across all categories fell marginally for FY 2015-16.
Dumping of Chinese tyres
Increasing imports from China continued in the first two months of the current fiscal 2016-17. The latest data from Automotive Tyre Manufacturers Assocation (ATMA) on tyre imports in India shows that import of radial tyres continues unabated.
A 20% increase has been seen in passenger car radial tyres imports , whereas truck & bus radial tyre imports reported a surge of 57% in the first two months of current financial year against the year-ago period.
According to ATMA, 280,000 units of TBR tyres have been imported in the country in the first two months of current fiscal, an increase of 57% over 180,000 TBR tyres that were imported in the corresponding months of FY16.
In May itself, import of TBRs reached 150,000 tyres which is almost 40% of the replacement demand of TBR tyres in India per month. “As the truck & bus tyre segment is the single largest category accounting for over 55% of Industry turnover, the dumping of imports is having a serious and adverse impact on the domestic Industry,” says ATMA in a statement.
China’s share in TBR import in India has gone up to an unprecedented 95% in 2016-17. China’s share in total TBR import was 40% in 2013-14, 70% in 2014-15 and 90% in 2015-16, ATMA data shows.
Meanwhile, tyre exports from India in the last fiscal reached 7,795,284 units, a 1% drop compared to 7,900,009 units in FY 2014-15. Segment wise, Tractor Front, Tractor Rear , Tractor Trailor, 3-W scooter and motorcycle tyres grew 34% (54,266 units) , 36% ( 86,708 units), 21% ( 9,786 units), 30% (6,80,816 units) and 20% (1,144,157 units) respectively.
Impact on production
Unregulated import of tyres has taken ia toll on production of tyres as well. Segment wise, passenger car, Off-the-Road(OTR), 2-w & 3-w scooter, motorcycle and other tyres ( ADVs etc) reported a rise in production, however, truck and bus, and light vehicle commercial tyres fell due to a surging imports of Chinese tyres in the segment.
ATMA data shows production of tyres across all the categories increased 4% to 1,13,88,45,645 units in FY 2015-16. Production of tyre in FY 2014-15 had stood at 1,13,35,27,975 units.
“The growth in tyre production in all categories is mainly attributed to 2-W and 3-W Scooter tyres and to some extend to passenger car tyres segment as the base of these two segments was very high. The demand for both these categories ( 2-W and 3-W Scooter and passenger car tyres) came equally from OE and replacement market as well,” explains Rajiv Budhraja, Director General of ATMA.
Production of vehicle across all categories spiked 2% to 24,531,200 units in FY 2015-16 against 23,971,041 units produced in FY 2014-15.
Passenger car production in the last fiscal stood at 35,215,969 units, an increase of 8% from 32,739,840 units produced in the fiscal year of 2014-15. Off-the-Road(OTR) tyres too reported a 8% rise to 437,113 units in FY2015-16 against 404,356 units produced in the corresponding year.
Production of 2-W and 3-W scooter tyres surged 17% and 14% to 15,506,559 units and 4,595,458 units respectively in the financial year of 2015-16. Motorcycle tyre product reported a marginal 2% increase to 53,102,173 units in FY15-16 against 51,923,239 units FY2014-15.
Falling TBR tyre output
However, production of truck & bus and light truck tyre fell 2% and 6% respectively in the last financial year. In domestic market, 15,253,829 truck & bus tyres were produced in FY 2015-16, which is 2% less than the production of 15,610,122 units produced in FY2014-15. “Whatever incremental growth is happening in radial truck and bus tyres segment in India is being eaten up by surging imports from China,” comments Budhraja.
Production of light truck tyres stood at 8,880,611 units in FY2015-16, a 6% fall against 9,430,730 units produced in the FY2014-15. Production of tractor front, rear and trailer tyres fell 9% (to 2,302,124 units), 7% (1,811,516 units), and 1% (1,039,403 units) respectively in the financial year ended March 2016. “Agri production has been falling in the country due to bad monsoon in the last two years affecting rural credits and that has taken a toll on agri equipment and tyres,” adds Budhraja.
In India, the dumping of truck-bus radials, especially from China, has impacted the revenue of most tyre companies. Turnover wise, the industry has seen a flat growth in FY 2015-16 compared to FY 2014-15. The turnover of the Indian tyre industry for FY 2015-16 was Rs 500 billion, same as the previous year.
Capacity utilisation
“Indian tyre industry continues to be at the receiving end of indiscriminate import of radial tyres especially Truck & Bus radials. There has been no let-up in dumping of tyres from China. Such indiscriminate import and dumping is hurting capacity utilisaton levels in the industry which have come down significantly over the last two years”, says K.M.Mammen, Chairman and Managing Director of MRF Ltd and Chairman, ATMA, in a statement.
According to ATMA, TBR tyres from China are being dumped into India as TBR export prices from China are significantly lower than the prices of such tyres in Chinese domestic market and also prices of similar exports originating from countries such as Thailand and South Korea. The per unit import price from China is even less than the cost of raw materials that go into the making of the tyres.
“Tyre manufacturers in India have made major investments to the tune of Rs 250 billion towards creating new capacities for manufacturing of state-of-the-art truck & bus radial tyres in view of rising radialisation in truck & bus tyres. But indiscriminate import and dumping of cheap tyres from China are seriously undermining domestic manufacturing”, adds Mammen.
Apollo Chairman Onkar S Kanwar admits that the company’s revenue in India, in the past financial year, has largely been impacted by the Chinese imports. “The imported truck-bus radials, especially from China, occupied close to 30% of the Indian replacement market for radial truck tyres, which not only impacted the domestic truck-bus radials, but also the truck-bus bias segment,” he says in a statement.
The recent imposition of stringent anti-dumping duties on Chinese imports by the US and the domestic slowdown in China are expected to increase dumping of Chinese tyres into India. The growing demand and lower duty on finished products in India may further abet dumping of tyres.
“Dumping of TBR tyres on such a large scale would adversely affect the interests of rubber growers in India as well as it reduces NR offtake by domestic TBR tyre manufacturers,” cautions ATMA.