Tyre industry calls for curbs as imports remain buoyant despite lockdown

In the first 11 months of FY20, a year that saw economic slowdown in India and reduced demand, tyres worth $385 million still made their way to the country

Calling on the government to place a cap on imports, the tyre industry has said it would facilitate increased domestic production, and subsequently exports, besides creating jobs.

According to data from the Directorate General of Commercial Intelligence and Statistics (DGCI&S), tyres worth $429 million were imported in FY19. In the first 11 months of FY20 — a year that witnessed economic slowdown and hence reduced demand — tyres worth $385 million came in, says the Automotive Tyre Manufacturers’ Association (ATMA).

Majority of the imports were from China. The country accounts for over 40 per cent of imports as regards both truck and bus radial (TBR), and passenger car radial (PCR) tyres. In the case of tractor tyres, Chinese imports account for 75 per cent of the total import. “Domestic manufacturing capacity is ahead of the demand curve, with India being self-sufficient in manufacturing practically all kinds of tyres. These include tyres for critical applications like fighter jets. Most of the imports are unwarranted, and have been hurting capacity utilisation in domestic manufacturing,” said K M Mammen, chairman of ATMA.

“The development is a sentiment booster for an industry that has been bearing the brunt of slowdown in the auto sector, and disruption caused by Covid-19. The tyre industry is looking at better-than-expected domestic production and increased exports,” added Mammen, also chairman of MRF. Mammen said restrictions on import would benefit the entire value chain, and demand for domestic natural rubber (NR) will rise once domestic production gets a fillip. According to ATMA, the indirect import of NR via tyre imports has been hurting the interests of NR growers.

Total tyre production in India declined by 8 per cent to 177 million in FY20, in view of the reduced demand in both replacement and OEM segments. The economic slowdown also hit consumer sentiment, which resulted in vehicle sales plunging to multi-year lows.

The TBR segment, which is the bread and butter of the tyre industry in India, accounts for over 50 per cent of industry revenues. It witnessed the sharpest drop in production, at 14 per cent. “In view of projections of an economic contraction, the tyre industry was expecting a further drop in output. However, restrictions imposed on imports will give a breather for it to increase domestic production,” added Mammen.