KOCHI: The Trump effect seems to be rubbing off on the Indian tyre industry. Following US President Donald Trump’s tariff threat on tyres from China, there is likely to be a simultaneous surge in imports of Chinese tyres in India.
A section of tyre dealers feel that tyre manufacturers did not roll back prices when natural rubber prices hit its nadir a year ago.
The Trump effect, coupled with the fact that natural rubber prices have climbed another 7% to touch Rs 160 per kg during the week keeping in step with global market trends, is likely to force the local tyre industry to raise the prices of tyres.
Apart from natural rubber, which accounts for around 40% of the raw material components of tyres, other principal ingredients like chemicals have also become costly with crude oil prices rising, leaving tyre makers no choice but to hike prices. Some tyre companies have raised tyre prices 2%-5%.
“We are forced to increase prices a bit as natural rubber and all the chemicals used in tyres have become costly,” said Vikram Malhotra, director, marketing, JK Tyres. He expects imports of Chinese tyres to swell if the US imposes tariff on tyres from China.
“Already imported Chinese tyres account for over 30% of the replacement segment of truck radial tyres in India. If the US imposes tariff on Chinese tyres, then its flow into India may increase further. The government is yet to accede to our demand for levy of anti-dumping duty on Chinese tyres,” he said
However, a section of tyre dealers feel that tyre manufacturers did not roll back prices when natural rubber prices hit its nadir a year ago.
“Interestingly, when natural rubber prices went up to Rs 240 per kg in 2010-11 and when crude oil prices touched $115 per barrel, tyre makers jacked up prices by 22% to 30%. But they did a meagre reduction of about 2% to 3.5% when NR prices touched Rs 90 per kg and crude oil prices slumped to $37 a barrel a year ago,” said SP Singh, convener of the All India Tyre Dealers’ Federation.
The tyre industry has been demanding a hike in import duty of finished rubber goods, including tyres, and was expecting the government to carry out the hike in the recent Union budget.
“The tyre industry was pinning its hopes on the long-pending correction of inverted duty on natural rubber. Correcting inverted duty on rubber is important to increase competitiveness in the tyre sector. Currently, import duty on natural rubber is 25% while duty on import of tyres is just one-third at around 7%” said KM Mammen, chairman, Automotive Tyre Manufacturers’ Association.
Meanwhile, brokers say natural rubber will continue to remain around Rs 160 per kg despite a correction on Friday when it fell to Rs 159 per kg.
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