Tyre industry may see shortage after quality-control order

The tyre industry may see a shortage and an increase in prices following a quality-control order issued by the department of commerce last month.

According to the order, no domestic tyre manufacturer, seller, distributor, importer or store keeper will be allowed to sell pneumatic tyres and tubes without the Bureau of Indian Standards (BIS) mark or without obtaining a certification mark licence.

According to industry sources, the tyre manufacturing industry has come to a standstill, since there is a huge amount of unsold inventory that cannot be sold without the BIS mark. Although data on the existing stock is not available, sources said, the total number of tyres manufactured in 2010-11 is around 57. 2 million and the industry has witnessed an annual growth of 5-60 per cent across segments, including trucks, mopeds, cars, jeep and tractors.

 

They said it would take time to get BIS certification for pneumatic tyres — a rubber tyre filled with air under pressure — because manufacturers will have to set up necessary infrastructure at the factory to meet the demands under BIS. The control order, however, exempts tyres imported by original equipment manufacturers to sell in the replacement market.

A section of industry bodies and tyre manufacturers have approached the BIS and department of commerce for an extension of the order, while others have moved court for a stay, said ministry officials. The department of commerce has sought a legal view on the issue from the law ministry before deciding on the representations, said official sources. Officials, however, said the industry is unnecessarily panicking, since the control order has been issued after several postponement and there was nothing new.

Sources said the tyre industry uses 70 per cent of natural rubber grown in India and is already plagued by rising costs of the raw material. They added that the demand for natural rubber is continuing to increase — especially in the booming automobile markets in Asia — and there is a decline in supplies. The Indian tyre industry has called for the government to allow duty-free import of 200,000 tonnes of rubber to help bridge the gap between India’s natural rubber production and demand.

The tight domestic situation has also forced Indian tyre companies to find alternative solutions such as scouting for new rubber plants and switching to synthetic rubber.

Synthetic rubber is a man-made, artificial compound that has similar properties and characteristics to natural rubber. Tyres consist of a mix of both materials and the average passenger tyre is made up of 27 per cent synthetic and 14 per cent natural rubber. However, despite competition from synthetic rubber, natural rubber continues to be an essential composite in tyre manufacturing. It has superior tear and heat resistance qualities and with high-performance tyre demands — for racing cars, aircraft and larger vehicles — the synthetic substitution is not the ideal replacement.