Tyre Dealers Seek Removal of Anti-dumping Duty in India

Squeezed between falling demand from local auto sector and depreciating rupee making imports costlier, domestic tyre dealers have urged the government of India to immediately notify the removal of anti-dumping duty.

On August 2, the Customs, Excise and Service Tax Appellate Tribunal had set aside the anti-dumping duty levied by the government. The tribunal directed the government to immediately withdraw anti-dumping duty on tyre imports from China and Thailand.

On Dec. 26, 2011, All India Tyre Dealers' Federation (AITDF) said the notification is yet to be published in the official gazette, although the government has honoured the order of the tribunal. "Hence, anti-dumping duty continues to be levied even now," according to S P Singh, AITDF convener. "We, therefore, urge the government to immediately notify the withdrawal of the duty."

The designated authority, anti-dumping and allied duties, Department of Commerce had imposed duty of $32 to $90 on import of truck or bus radials. A steep decline in the rupee by 23 per cent in last two quarters has crippled the tyre import even for passengers car radial and two and three-wheeler tyres as well.

The inordinate delay in issuance of tyre quality standard certification by Bureau of Indian Standard (BIS) to the more than two dozen foreign tyre brands according to the Quality Control Order, 2009, implemented on May 13, too has further reduced the import of tyres from Brazil, South Africa, Europe, China, Korea, Japan, Taiwan, Malaysia and Indonesia.

This has been exploited to the hilt by the domestic tyre majors causing hardships to local tyre dealers, road transporters and, in turn, high tyre prices and domestic short supply due to steep increase in tyre exports is resulting in higher transportation caused and consequently pushing up the inflation, Singh added.

Depreciating rupee at 52.84 against the US dollar with 23 per cent decline in last five months has caused a drastic drop in tyre imports, coupled with tariff and non-tariff barriers — high prices and shortage of various categories of tyres and tubes despite onset of traditionally low domestic demand winter seasons in the country.

Consequently, the domestic tyre industry is facing huge difficulty on import of various categories of tyres used for commercial vehicles, passenger cars and SUVs, mining equipment and two, three-wheeler vehicles. Since April 2011, tyre imports in the replacement market have dropped by over 70 per cent and the rupee depreciation has raised the exports 30 per cent, leading to high domestic tyre prices and shortage of various categories of tyres and tubes even during winter season in which the demand traditionally falls 5-10 per cent.

Tyre imports for replacement bus and truck markets has slumped to nearly 10,000 units in November as compared to nearly 125,000 units early this year.

The most shocking is the stubborn behaviour of oligopoly of domestic tyre majors refusing to relent voluntarily by rolling back the tyre prices to January 2011 level as natural rubber price has dropped to Rs 200 per kg now from the peak Rs 240 per kg in May this year. Instead, the tyre prices of various categories since January 2011 have gone up by 15-20 per cent.

The removal of anti-dumping duty, according to a tyre dealer, will help the trade and the users of the good. What's more, it would contain runaway inflation, which is being contributed by increasing truck freight for past two years, he added.