The Hindu Business Line : Decline in import of Chinese tyres seen

Kolkata, July 8 Having withstood the negative impact of anti-dumping measures imposed by Indian authorities, cut in export subsidy by Chinese authorities and the rising freight cost, import of Chinese tyres is believed to have finally been on a decline due to the negative impacts of an weakening rupee.

According to industry sources, import of Chinese tyres for commercial vehicles has come down by approximately 40 per cent from as high as 1.5 lakh to 1.05 lakh tyres a month during January-June 2008. The fall was attributed to a sharp devaluation of rupee against dollar.

The Indian currency dropped by almost 10 per cent during January-June 2008. The fall was sharper during the April-June 2008 quarter when the rupee dropped by 305 paise or 7.6 per cent from as high as 39.88 a dollar on April 1 to 42.93 a dollar on June 30. The devaluation continued during the last one week and on July 7 the rupee closed 36 paise lower at 43.29 against dollar.

“The depreciation of rupee has hurt the imports dearly during the last six months especially during the April-June quarter. Accordingly, the import of radial tyres has now come down from as high as 1.20 lakh tyres ago this year to a mere 90,000 a month. Import of cross-ply or BIAS tyres dropped from approximately 30,000 to 15,000 a month,” an industry source told Business Line.

The trading and importing lobby – which has previously blamed the Indian manufacturers for price cartel – is now believed to be preparing to press the Government for an import duty cut as an anti-inflationary measure. The demand may gain sufficient strength if auto majors and MMTC – planning to start tyre imports this year – join the bandwagon.

It may be mentioned that in July 2007 the designated authority under the Union Commerce Ministry has recommended the definitive dumping duty on imports of tyre, tube and flaps from China and Thailand at $135.65.

Almost at the same time China had reduced the subsidy on tyre exports to India. Freight rates also increased for India bound cargo.

However, a rising rupee could successfully neutralise the negative impact of both the developments leading to substantial growth in imports during July-December 2007.

When contacted Automotive Tyre Manufacturers’ Association (ATMA) – the association of Indian tyre producers – admitted that imports should come down with falling rupee. ATMA, however, felt that imports from China were on a growth path till May this year.