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Tyre units, auto makers at odds

Tyre makers are at loggerheads with automobile firms, with auto makers crying foul over the imposition of anti-dumping duty on Chinese radial tyres last month.

business Updated: Feb 17, 2010 21:05 IST
Sumant Banerji

Tyre makers are at loggerheads with automobile firms, with auto makers crying foul over the imposition of anti-dumping duty on Chinese radial tyres last month.

Leading auto makers Tata Motors and Ashok Leyland have criticised the duty saying their expansion plans have been hit because of a shortage of radial capacity in the country.

"There is a shortage of all components and not just tyres, between at least 5 and 10 per cent," said Ravi Pisharody, senior vice-president (commercial vehicles), Tata Motors. "We are in consultation with component suppliers and tyre companies and hopefully we will be able to find a solution before the start of next fiscal (April 2010).”

Tyre makers said spurious Chinese tyres often make their way into the country and the anti-dumping industry was only restored an industry parity.

The low “radialisation” in the domestic commercial vehicle industry seems to be the main bone of contention between the two industries.

Industry officials say India’s radialisation is at a 5 per cent, which is extremely low when compared with Brazil (72 per cent), China (70 per cent). The world average is at 65 per cent.

Dilip Chenoy, director-general, Society of Indian Automobile Manufacturers, said there was a significant shortfall of capacity in radials for trucks and buses. “The domestic industry has not expanded in line with demand and with restrictions being imposed on imports as well, what option does the automobile industry have?”

Tata Motors already imports tyres from China while Ashok Leyland is expected to join soon.

"We do import components from China and the quantum is only going to go up," said R Seshasayee, managing director, Ashok Leyland.

Car makers are also facing the tyre crunch, but on a smaller scale. “With tyres, it is always a hand-to-mouth situation,” said RC Bhargava, chairman, Maruti Suzuki India Ltd.

Neeraj Kanwar, managing director, Apollo Tyres, cited a US ban on Chinese tyres as a trigger for dumping into India. “It is a fact that the Indian customer does not want a Chinese radial, which has a dodgy track record,” said Kanwar.