Chinese competition for tyre ‘cartel’… via MMTC imports

Radial Capacity Crunch Opens up huge demand for foreign tyres; state-run Minerals & Metal Trading Corp to finalise plans in 2 months.

The domestic tyre industry, which is facing charges of cartelisation, may soon receive a fresh dose of competition from Chinese imports, this time from the government’s very own Minerals and Metal Trading Corporation (MMTC). To take advantage of the growing demand for commercial vehicle (CV) tyres, the state-run corporation has already collected price-related information on truck and bus radials from Chinese exporters and tyre companies. While MMTC chief Sanjiv Batra said the company did not have any such plans “at present”, sources in the corporation told The Indian Express that it was studying the market and a decision would be taken in four to six weeks.

An MMTC official who did not wish to be named said, the company is also in talks with various state transport undertakings (STUs) and transporters to assess the marketability of these tyres. “Further, we are also targeting PSUs such as Coal India Ltd (CIL) which require off-the-road radials for mining operations. These are not produced in the country now,” he informed.

Initially, MMTC may opt for importing 50,000 tyres a month from China, which will later be doubled to 100,000, giving that country’s firms an almost 50 per cent market share in the tyre import market. At present, 1.4 lakh tyres are imported a month largely by about 30-35 small individual importers.

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Minerals and Metal Trading Corporation’s imports will largely target the replacement market that, at 7 lakh a month, accounts for 65 per cent of the overall CV tyre market, the official said. Tyre imports have significantly impacted this segment, with volumes shooting up from a mere 10,000 a month in 2004 to 1.4 lakh now.

Tyre prices have gone up in the last few months, largely on the back of rising natural rubber prices. Last week, the investigative division of the quasi-judicial Monopolies and Restrictive Trade Practices Commission (MRTPC) issued notices to five major tyre companies — JK Tyres, CEAT, MRF, Goodyear and Apollo — for indulging in anti-competitive behaviour.

“Tyre companies operate in an oligopolistic manner and discourage competition. Import of radials cannot be curbed because tyre manufacturers neither have the capacity nor the technology to do that. MMTC will bring in some much-needed competition in the market,” said Indian Foundation of Transport Research and Training coordinator S P Singh.

The Rs 20,000 crore tyre industry has an installed capacity of 11 lakh truck and bus tyres but radials account for a mere 4 per cent. Chinese imports are mostly in the radial space, especially after the anti-dumping duty was slapped on cross ply and bias tyres in October 2006.

Enter the dragon

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•MMTC has collected price-related information on truck and bus radials from Chinese exporters and tyre firms

•Company in talks with state transport undertakings and transporters to assess marketability of these tyres

•lso targeting PSUs like Coal India Ltd which require off-the-road radials for mining operations

•MMTC’s initial Chinese imports may be 50,000 tyres a month, to be doubled later to 100,000