Demonetisation hurts tyre imports from China.
According to top tyre companies, Chinese imports, a cause for major worry among Indian tyre makers -came down to almost nil post-November because a large component of the trade was cash driven. Demonetisation may have hurt tyre companies but it had one positive fallout in the fact that it almost wiped out cheap Chinese imports.
According to top tyre companies, Chinese imports -a cause for major worry among Indian tyre makers -came down to almost nil post-November because a large component of the trade was cash driven. Although imports are picking up from mid February, this time round bigger operators are in the fray, who pay taxes and offer products at competitive and not throw-away prices, say industry experts.
“Demonetisation impacted our sales in December and January but it hit Chinese imports. For nearly three months, there were hardly any imports but Chinese tyres are back from February,” said Vikram Malhotra, director marketing, JK Tyre. The new market dynamics, say experts, is less driven by cut-price positioning of earlier imports.
“Dumping of Chinese tyres came down after demonetisation because many of those tyres were sold on cash and there was a lot of VAT evasion. December-January saw Chinese imports come down 50%. Imports are back from February but they are being imported by bigger and more regularised traders who pay taxes,” said Satish Sharma, president, Asia Pacific, Middle East and Africa, Apollo Tyres.
Creeping increase rubber prices global is also bringing down the price differential. “Raw material prices have impacted both us and them and price of Chinese tyres have gone up by 10%,” Sharma said. That’s a bit of silver lining for the tyre market which has been hit by dumping of Chinese tyres as well as the slowdown.