Dealers oppose planned duty on tyres

NEW DELHI: Domestic tyre manufacturers, including Apollo, Birla, Ceat, Goodyear and MRF, are heading for a confrontation with their dealers by month end, when the government is expected to impose a special duty on import of passenger car tyres from China.
The directorate general of safeguards has said, prima facie, the increased import of passenger tyres was threatening to cause market disruption for domestic producers after it initiated an investigation past month on the need to impose the duty. Safeguard duty is a levy imposed to check surge in imports of identified products.

���We have invited views from all concerned. We will look at all representations before taking a decision. However, on the face of it, there does seem to be a case for application of safeguard duties,��� a government official said on condition of anonymity.

Tyre dealers are, however, opposing the proposed safeguard duty. Domestic passenger car radials are highly overpriced, said SP Singh of the All India Tyre Dealers��� Federation. The import situation was not all that grave as during April-December 2008, the monthly average of domestic passenger car tyre sales were at Rs 300 crore per month against a monthly import of Rs 29 crore, he added.

���Import at reasonable and concessional fair prices is the need of the hour to protect the consumer against arbitrary pricing by the domestic industry,��� said Mr Singh.

The government has intimated the World Trade Organisation (WTO) of its intention to impose safeguard duties on passenger car tyre imports from China. In a submission to the committee on safeguards, the Indian delegation to WTO stated that imports from China had shown an increase in absolute terms as well as relative to total domestic sales since 2005-06.

The share of imports in total sales increased from 2.52% in 2005-06 to 7.29% in October-December 2008. The monthly production and capacity utilisation of the domestic industry also declined during October-December 2008, thereby, hurting profitability, the submission added.