Yuan devaluation to hit domestic bicycle industry

Devaluation of the Chinese currency may dent the already stressed domestic bicycle industry, as the latest move by the neighbouring country will swell import of cheap Chinese bicycles and parts.
Already struggling to survive the impact of Chinese bicycles, the industry wants complete ban on import of bicycle items from the Centre to protect domestic bicycle manufacturing.
"There is going to be adverse impact of the decision of China to devalue its currency Yuan as it will not only lead to increase in import of Chinese bicycle and parts but also hit exports of bicycle from India," Engineering Export Promotion Council, Panel Convenor, (Bicycle Parts), Satish Dhanda said today.

China last week devalued its currency to combat economic slowdown amid falling exports.
India , as of now, imports bicycle and its parts worth Rs 1,200-1,300 crore per annum, said Dhanda who is also bicycle maker based at Ludhiana.
The industry, which is one of the oldest clusters in the country, demanded that the Centre impose complete ban on Chinese bicycle and parts.

"The government should at least ban those items which are manufactured here in order to save local industry," said Gurmeet Singh Kular, President of Ludhiana-based Federation of Industrial and Commercial Organisation.
"Exports from Punjab which are on a declining trend will make the environment even more hostile. A more competitive market will not just mean that Punjab exports to other countries could go down, but that Chinese imports to Punjab could be set to increase," said Chamber of Industrial and Commercial Undertaking, President Avtar Singh.

Singh asked the Union Government to introduce zero Income Tax on exports for the next five years as was prevalent in 1992 when the rupee fell against the US dollar.
India has been witnessing huge import of Chinese bicycles despite Centre imposing import duties on the same. Industry insiders said that Chinese bicycle is making its way to India via countries such as Sri Lanka, Bangladesh, Malaysia where "import duties" are lower.
Dubbing this practice as "escape route", industry insiders further said some bicycle importers import cheap Chinese bicycles via other countries by "circumventing" the law, resulting into a blow to the domestic bicycle makers.

Indian manufacturers are heavily dependent on China for several high-end bicycles and parts like steel balls, basket, spoke, air-pumps, hub-cup, hub-kone, carrier, bicycle chain, handle bolt, brakes, high end steel frame, alloy parts among other items.
Chinese bicycle parts are 15-20 per cent cheaper than items produced in India.
Ludhiana, a major industrial hub, caters to country's over 90 per cent bicycle and bicycle parts requirements and it houses prominent brands such as Hero Cycles and Avon Cycles.