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Cheap Chinese imports under SAFTA bleeding bicycle makers

Caught in the vicious circle of the cheap imports from China, city’s bicycle manufacturing industry has been reeling under severe pressure. The third part of the series on the expectations of the city industry from the union budget 2014 scheduled for July 10 is bringing forward the issues related to the bicycle industry.
By Arjun Sharma | Hindustan Times, Ludhiana
UPDATED ON JUL 09, 2014 03:25 PM IST

Caught in the vicious circle of the cheap imports from China, city’s bicycle manufacturing industry has been reeling under severe pressure.
The third part of the series on the expectations of the city industry from the union budget 2014 scheduled for July 10 is bringing forward the issues related to the bicycle industry.


The major part of the country’s bicycle manufacturing industry is based in Ludhiana. There are at least 4,000 units in Ludhiana that manufacture bicycle and its parts, which are even supplied to some international companies. With some of the world-famous brands based in the city, the industry generates huge revenue and employment.

But, at present the cheap products from China and duplicate products have made a dent in the bicycle industry in Ludhiana. The industrialists claim that the other major issue is that the South Asian Free Trade Area (SAFTA) route is being used by China for inflow of cheap cycle parts, and that too without any agreement.

As per the SAFTA agreement, only the member countries can use the route, but against it China is selling its products to the member countries from where the products are then sold to India without any import duty. This process is leading to heavy losses to the industry as well as the country.
Cycle industry has been trying hard for the past long time and pleading the case with central government to take measures to save the industry in Ludhiana.

STEEL REGULATORY BODY

ROLLBACK OF CENTRAL EXCISE DUTY

Bicycle industry has been demanding for the past long time that the central excise duty of 2% be removed. Industry claims that the price of a bicycle increases by ? 50 with this central excise duty. Although the cost of a single cycle does not increase significantly, the paperwork increases. Also, this miniscule duty is not of much profit to the central government.

SUBSIDY ON USED IMPORTED MACHINES

Due to the lack of upgrade in technology, cycle industry is reeling under heavy pressure. New technology and import of cycle parts has already made a dent in the Ludhiana cycle industry. City-based businessmen want that a subsidy on import of used machinery should be provided by the central government so that tech upgrade could take place in industry. This will help us in increasing production. With this the quality will increase automatically, which will also reduce prices of the products.

MONITORING OF SAFTA ROUTE

South Asian Free Trade Area route has been damaging the prospects of Ludhiana bicycle industry, as China has been dumping its cheap cycle parts from this route. Local traders are annoyed with the inaction of the central government on the entry of Chinese cycle parts from SAFTA countries with no import duty. These Chinese parts enter India from Sri Lanka and Bangladesh.

NEW LABOUR LAWS

Cycle industry rue that there is a dearth of better labour laws in the country, that affects the industry in Ludhiana as well. The industry has demanded that there should be new labour laws suiting the present environment. Industry says that there were so many old laws that were hampering the growth of industry and should be replaced immediately with the advanced laws. United Cycle and Parts Manufacturers’ Association (UCPMA) has also been making a demand that a regulatory body for price of steel should be formed so that sudden rise in the price of steel every now and then, that directly impacts the cycle industry could be checked. This would also ensure proper planning in manufacturing by the industrialists.

INCREASED IMPORT DUTY ON BICYCLES, PARTS

Bicycle industry also made a demand that import duty on bicycle and its parts should be increased from the present 30% (bicycles) and 20% (cycle parts) to 50%, so as to keep a check on the cheap imports from China. UCPMA president Charanjit Singh Vishivkarma said, “The cycle industry has been going through a tough phase and require immediate attention of the central government for its revival. The SAFTA route and 2% central excise are the major issues that need to be redressed by the Centre.”

Avtar Bhogal, owner of MS Bhogal and Sons, said, “Soon after the creation of SAFTA, countries like Sri Lanka where India used to export bicycle parts started sending containers of these parts to India. This clearly shows that there is something wrong in the policy. Government of India needs to understand that China is sending its products using the route that should be stopped immediately. While the local manufacturers were facing losses, markets in other countries were flourishing due to the SAFTA.”

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