The rupee has depreciated by Rs 3 since April 21, when it stood at Rs 39.89, to Rs 42.79 against the dollar on Wednesday, according to the data provided by the Reserve Bank of India (RBI).
This, tyre dealers say, has mellowed down the country's imports of radials and pushed up the cost of radials in the domestic tyre market.
The country imports about 95 per cent of tyre from China. China produces 1 million radial truck and bus tyres each month. Whereas two of the top-five tyre majors in India produce 20,000-25,000 radials each month.
However, tyre manufacturers claim that there has been a price hike in radials, but it has got no relation with the rupee depreciation.
Arnab Banerjee, vice-president, sales marketing, Ceat Tyres, said, "There has been an increase in the cost of radials of trucks and buses, but that is primarily because of hike in input costs. Prices of Ceat radials have not been driven by the rupee depreciation."
Imported tyres attract 28.5 per cent duty, including 14.5 countervailing duty, as against 14.5 excise duty levied on the domestic production.
The All India Tyre Dealers Federation (AITDF) has asked the government to reduce the import duty on radials, while retaining the anti-dumping duty on bias-ply truck and bus tyres that was brought into effect last July.
Radials do not come under such anit-dumping duty structure. "At present, modern technology truck and bus radial tyres have overtaken the outdated technology of bias-ply truck/bus tyres during the last two-three years. Domestic tyre majors sell almost 25,000 radial tyres each month in the replacement market as against 100,000 units of imported radials each month. The government should remove the import duty to facilitate the free import of radial tyres and tubes" stated a release from AITDF.
Radial tyres provide 5-7 per cent more mileage compared with traditional bias-ply tyres. It also ensures safety on the highway at high speeds and is environment-friendly.
But there is a huge gap between the demand and supply of radial tyres in the country.
