Anti-dumping duty in force on the subject goods from these two countries had brought down imports to negligible levels recently, enabling the domestic tyre companies to reap hefty profits.

Even as the Designated Authority in the Commerce Ministry has commenced a sun-set review on the anti-dumping duty on imported ‘new/unused pneumatic non- radial bias tyres, tubes and flaps for trucks and buses' from China and Thailand to determine whether the duty is to be ceased or continued, the domestic tyre users and dealers have made a case for the cessation of duty forthwith.

Talking to Business Line here, the Convenor of the All India Tyre Dealers' Federation, Mr S.P. Singh, accused the domestic tyre manufacturers of acting as an oligopolistic cartel orchestrating periodic hike in tyre prices and not passing on the excise duty concessions given to them to the consumer by way of relief from unrelenting tyre price hike.

That was why he said that their plea to get a safeguard duty on import of passenger car radial tyres from China failed, while more recently the Customs, Excise & Service Tax Appellate Tribunal set aside even the anti-dumping duty on import of truck/bus radial tyres from China and Thailand.

He pointed out that for the last several years the domestic commercial vehicle production has been growing at 20-25 per cent a year and in the last fiscal it grew by a hefty 32 per cent.

Hence the demand for truck/bus tyres from the original equipment manufacturers and in the replacement market, served by a vast network of dealers for truck and bus operators by selling and distributing truck/bus tyres of domestic and overseas brands, has been shooting up phenomenally.

He said the anti-dumping duty in force on the subject goods from these two countries had brought down imports to negligible levels recently, enabling the domestic tyre companies to reap hefty profits through periodic upward revision in prices.

This was aggravated by the implementation of the Quality Control Order for pneumatic tyres and tubes from May this year directing domestic and overseas tyre makers to have mandatory BIS certification.

Mr Singh said while the domestic tyre companies seldom voluntarily plumped for subscribing to the BIS quality norms made since 1986, imported tyre brands always were coming into the Indian market with quality marking of their country accepted in the developed country markets, besides product liability clause.

But the simultaneous direction to implement BIS Quality Standards for both the domestic and overseas tyre makers has led to steep drop in import of various categories of tyres and tubes as BIS certification procedure was quite cumbersome to foreign players as they were not tuned to the nuances of dealing with the system, he said.

This sort of non-tariff barrier to placate domestic tyre manufacturers by the authorities would only push up the cost of domestic tyres, he said.

The combined fallout of the unduly high domestic tyre prices due to unwarranted tariff barrier on import of truck/bus tyre together with the bleak prospect of continuing the anti-dumping duty after the review presage increasing truck rentals and bus operators' dynamic cost, he added.

Hence the Federation pleads for withdrawal of the existing levy once it runs its scheduled phase in the larger interest of trade, transport and the economy.

Trade policy analysts say that the policy of the Commerce Ministry appears contradictory.

On one hand it appeases domestic natural rubber growers by giving them fiscal subsidies for new planting and replanting in non-traditional regions, while on the other it had to arrange import of natural rubber at concessional rate of duty to provide the industrial raw material to domestic tyre manufacturers.

For instance the Commerce Ministry has conceded in a written reply in the Lok Sabha on August 29 that the gap between production and consumption of natural rubber has widened to 86,000 tonnes during 2010-11 but it has only allowed import of ‘a limited quantity of' 40,000 tonnes of rubber at a reduced duty of 7.5 per cent during the last fiscal.

As the import gap in natural rubber could not be bridged at concessional level lest the domestic natural rubber growers should resent, the domestic tyre manufacturers are unwilling to allow import of tyres as their rate of return and secure market share would be in danger.

All these conflicting components have together made import of tyres a difficult proposition, affecting replacement market broadly and the retail consumer harshly, the Federation said.

(This article was published on September 20, 2011)
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