Domestic tyre manufacturers are facing stiff competition from Chinese brands, on the back of an unexpected surge in import of radials into the country. With the import of truck and bus radials (TBR) shooting up 64 per cent in FY16, the bulk of the Rs 35,000-crore new investments by Indian tyre makers are under stress.
Delhi-based Apollo Tyres, the largest TBR manufacturer in India, has committed Rs 2,700 crore investment to double its TBR capacity to 12,000 tyres per day at its Chennai plant.
Most of India's TBR imports are from China, whose share in the category jumped to 90 per cent in 2015-16 from 40 per cent in 2013-14, according to data shared by the Automotive Tyre Manufacturers’ Association (ATMA).
TBR import to India has swelled 2.5 times over the past two years. From an average per-month import of 40,000 units in FY14 and 65,000 in FY15, TBR imports crossed 100,000 units a month in FY16, according to ATMA.
Such dumping of radials comes at a time when the TBR segment is progressing to radials from cross-ply tyres. At present, 40 per cent of the industry is radialised, while the balance is still cross-ply. This ratio is set to reverse, according to experts.
The uptick in radial demand is in sync with an equal rise seen in demand for medium and heavy trucks and buses, which closed last year with 302,373 units against 232,755 units sold in 2014-15, according to data by the Society Of Indian Automobile Manufacturers.
Further, the Chinese TBR import has come to account for 30-40 per cent of the replacement demand for TBR in India. A Chinese truck or bus radial costs $140-150 (Rs 9,400-10,000) in India, around 30 per cent lower than an Indian tyre costing Rs 15,000. According to ATMA, the per-unit import price from China in many cases is less than the cost of raw materials in India.
K M Mammen, chairman of ATMA, said: “The government needs to take urgent measures to halt such sharp surge in imports and dumping of tyres. Tyre manufacturers in India have made major investments. But, indiscriminate import and dumping of cheap tyres from China are queering the pitch for domestic manufacturing.”
According to data for the April-December 2015 period, the average domestic production of TBR per month in India is 500,000 units. Apollo is the leader in this segment, followed by Chennai-based MRF and Delhi-based JK Tyres.
"The capacity utilisation levels of the industry in case of TBR manufacturing have come down to 70 per cent in 2015-16 from 80-85 per cent in the previous year. TBR is the fastest growing large tyre category in India," said Rajiv Budhraja, director-general of ATMA.