Chennai: The Centre’s recent move to impose countervailing duty (CVD) on import of new Chinese Truck and Bus radial (TBR) tyres for a period of five years will not have significant impact on demand for domestic tyres, says a report.
Ratings firm Icra has said the reason is that currently, domestic TBR demand is not met by Chinese tyre imports.
“Also, the existing Anti-dumping duty (ADD) will be deducted from the currently imposed CVD to arrive at the final duty. Only if the CVD is more than the ADD in force, the differential will be collected as CVD,” said the report.
The duty was imposed on 24 June in the range of 9.12 per cent to 17.57 per cent on imported TBR tyres originating from China and exported through any country (including China), and TBR tyres exported from China irrespective of the place of origin.
In September 2017, the Centre had re-imposed ADD on import of Chinese TBR tyres for five years, ranging between $245.35 and $452.33 per tonne (or) nine per cent to 15 per cent.
According to the report, TBR tyre imports declined considerably (volumes down 29 per cent CAGR during FY2017-19) post the ADD re-imposition and the 500 bps increase in customs duty in April 2018.
TBRs accounted for around 21 per cent of overall tyre imports in FY19 as opposed to 42 per cent in FY17), the report said.
Specifically, imports directly from China has declined sharply (down 61 per cent CAGR during FY17-19) and its share of the total TBR tyre imports by India has reduced from 89 per cent in 2017 to 27 per cent this year.
However, some Chinese tyre manufacturers have set up plants in Thailand and this has resulted in higher imports from Thailand (up 180 per cent CAGR during FY17-19). During the last fiscal Thailand contributed to over 60 per cent of total TBR imports in India and its share is likely to remain high, Icra noted.
VP and co-head, Corporate Ratings, ICRA, K Srikumar, “Indian tyre makers have made significant investments in TBR capacities in the last one decade, however their capacity utilisation was affected by the influx of low-cost tyres from China. But post the ADD in September 2017, the monthly imports from China have crashed from the peak levels of 1.6 lakh tyres (in June 2016) to less than 6,000 tyres (in March this year). While the overall dependence on imports has declined (with imports meeting only eight per cent of demand), the domestic replacement market still imports low cost tyres from other countries like Thailand, where there is a trade agreement. Tyre demand in India is currently subdued following the contraction in automotive demand and the rubber prices have increased by over 20 per cent in the last three months.”