The Hindu Business Line : Tyre exports increase despite rupee rise

New Delhi, Dec. 5 The appreciating rupee does not seem to have depressed the export growth of tyre manufacturers as the first six months of the current fiscal have recorded a 19.2 per cent increase in exports to 30.97 lakh units. This has increased from 25.99 lakh units in the same period last year. In contrast to fiscal 2006-07 that witnessed a slower pace of export growth as compared to the previous year, the numbers seem to have bounced back.

“Exports in 2006-07 had shown a decline, as the demand in the domestic industry was healthy. With serving the domestic industry being a priority, exports seem to have slowed down. But now the industry has added capacity to increase its competitiveness, which would make the export growth come back to earlier levels. We expect exports to remain buoyant ,” said Mr Neeraj Kanwar, Joint Managing Director and COO, Apollo Tyres.

Slower export growth

However, JK Tyres holds currency fluctuation responsible for slower export growth in the last fiscal and increase in exports due to lower domestic demand in the first half of the current fiscal. “Dollar has weakened by 12-15 per cent in the last months resulting in exports fetching lower value per tyre as against imports that have become attractive in the same proportion. This had led to slower pace of export growth in the FY2006-07,” said Mr Arun Bajoria, President, JK Tyre. Explaining the export surge in the first six months of the current fiscal, he added, “ During April-Sept 2007-08 there was a surplus situation since the original equipment manufacturers (OEMs) had cut down purchases of domestic truck tyres. Those tyres were exported which led to a sudden surge.”

According to the Automotive Tyre Manufacturers Association (ATMA), long-term contracts between manufacturers and OEMs is the reason for exports not showing a sudden fall.

“Exports have increased mainly due to the contracts being long-term in nature as a result of which volumes do not show a sudden fall. But we won’t see the same rate of growth due to rupee appreciation and competition from China in India’s major export market,” said Mr Rajiv Buddhiraja, Director General, ATMA.

With regards to imports, the latest figures from the Directorate-General of Commercial Intelligence and Statistics report a 98 per cent jump. ATMA estimates that of the total truck and buses tyres imports, 85 per cent are from China and in passenger car tyres 50 per cent comes from China and South Korea.

“Rising imports in every quarter has been a concern on the grounds of unreasonable pricing and unacceptable quality standards,” said Mr Kanwar.

The industry association also factors in the declining tarriff structure to explain increase in imports.

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