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| Tyres lose traction, exports skid 12% |
| Swaraj Baggonkar / Mumbai Mar 02, 2009, 00:02 IST |
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A drastic fall in automobile sales internationally, coupled with tightened import norms imposed by most countries, has impacted the exports of local tyre manufacturers with demand sliding by 12 per cent in the last three quarters.
Although the value of rupee has depreciated substantially against the dollar and other currencies during the same period Indian tyre manufacturers, including Ceat, JK Tyres and Industries, Apollo Tyre and MRF, failed to capitalise on it due to a slump in demand.
Other factors like a huge inventory build-up in cheaper manufacturing countries including China has added to the threat. A fall of 20-25 per cent in exports is due to the slowdown factor impacting trucks, buses and cars globally.
According to the Automotive Tyre Manufacturers Association (ATMA), the apex body of tyre makers, Indian tyre companies exported 23.46 lakh tyres during April-December 2008, a fall of 12 per cent, when compared to the same period a year ago when the industry saw exports of 26.68 lakh tyres.
The fall has been severe in the truck and bus segment with a drop of 16 per cent in exports to 15.63 lakh units as against 18.65 lakh units in the same period the previous year. Meanwhile, the passenger car segment reported a fall of 2 per cent at 7.83 lakh units as compared to 8.03 lakh units posted during the two comparable periods.
“Due to high import tariff in Malaysia, Vietnam, Indonesia and Thailand, Indian tyre exports are not competitive. At the same time, these countries are high growth markets in terms of production and consumption,” said Rajiv Budhraja, director general, ATMA.
Exports of Mumbai-based Ceat, India’s largest exporter of tyres, have suffered during the three quarters. However, the company says that the current quarter has brought some revival.
Arnab Banerjee, vice-president, sales and marketing, said, “About 20 per cent of our production is exported as of today, but we have seen a drastic fall in demand from markets like West Asia, Africa and Latin America. These markets deteriorated much earlier and faster than the Indian market.”
“Although the current quarter has been better so far, compared to the earlier quarters, we will not post any growth in net profit for the full financial year,” he further added. According to ATMA, Ceat exported Rs 412 crore worth of tyres from India during the April-December period. Its market share stood at 23 per cent from the industry total of Rs 1,806 crore reported in the same period.
ATMA has proposed a few measures to tackle the current slowdown. It has asked for benchmarking taxation and incentive structure with China so as to remain competitive in the export markets. The measures suggested by tyre industry include reducing the interest rate for pre-shipment credit to 6 per cent (equivalent to China) from the existing 10-11 per cent and abolition of value cap in respect of tyres.
It has asked the differential of import tariff (between India and these countries) to be compensated by the government till the time such import tariffs are brought at par.
Such an incentive would give the much-needed push to tyre exports from India to these (non-traditional) markets, said ATMA.
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