The removal of anti-dumping duty on truck and bus tyre imports from China and Thailand is likely to affect the tyre industry and rubber growers, sources in the trade said.
They said that China has built huge capacities in tyre commanding some of the lowest cost in production. It can swamp the Indian market with cheaper imports that will have a direct bearing on the Indian industry.
Eyes on Thailand
Thailand has huge rubber production of around 30 lakh tonnes (lt) even as it consumes only 7-8 lt per year. This would act as a magnet for Indian tyre majors to set up production units there, said Mr N. Radhakrishnan, Advisor to the Cochin Rubber Merchants Association (CRMA).
While the country's rubber production just about meets domestic demand, the huge surplus in Thailand and Indonesia and cheap prices could act as a major catalyst. “Prices in Thailand and Indonesia wil work out substantially lower once you cut out the broker commission, freight and handling charges and duties,” Mr Radhakrishnan said.
Already several global tyre majors are reported to be deliberating on setting up production units in Thailand. In case anti-dumping duty on tyre imports are not re-imposed, similar moves by tyre companies cannot be ruled out in the not too distant future, sources said.
Cascading impact
The cascading impact would also be felt on growers. With each truck tyre consuming close to 40 kg of rubber, the demand for Indian rubber would fall, trade sources said. And truck, bus and heavy duty tyres account for close to 70 per cent of the domestic consumption.
A section of the trade pointed out that movement of capital to set up business enterprise outside the country would be an inevitable part of globalisation and it cannot be stopped.
Movement of capital and enterprise outside the country is fine, but should it be at the cost of Indian industries and farmer remains the moot question.