CHAPTER III INDIAN TYRE INDUSTRY A PROFILE STRUCTURE OF TYRE INDUSTRY IN INDIA There are over 49 tyre plants representing 43 tyre companies which are relocated all over India. Despite its geographical dispersal, 10 large tyre companies account for over 95% turnover of the Indian tyre industry. Among these 10 large companies, 4 companies namely MRF Ltd., Apollo Tyre Ltd., Ceat Ltd. and JK. Industries account for approximately 70% tumover of tyre industry in India. Overview of Indian Tyre Industry (Year 2005-06) Total No. of Tyre Companies B Total No. of Tyre Factories 9 Industrial Turnover Rs.14,500 crores Installed Capacity 850 lakhs/Nos. Capacity Utilisation 78% Taxed and Duties paid Rs3,500 crores (29% of total turnover is taxed) Excise Duty contribution Rs.1,600 crore (one of the highest payer of excise duty) As shown above the tumover of tyre industry is Rs.14,500 crores out of which 62% accounted for by bus and truck tyres. Out of the installed capacity of 850 lakhs tyres per year the capacity utilisation is 78%, Indian tyre industry is a large contributor of taxes and duties to the Government of India (Rs.3,500 crore in the financial year 2005-06.) 67PRODUCTION AND RANGE Table 3.1 Production and Range of Tyre Tyre Production Financial Year Production % Change— YoY (Lakh/Nos.) (YoY - Year over Year) 2000-01 424.71 3% 2001-02, 435.14 2% 2002-03 $15.85 19% 2003-04 546.90, 6% 2004-05 600.82 10% 2005-06 660.32 10% ‘As shown in the table 3.1 tyres production in India is 660.32 lakhs in the year 2005-06. The average annual compound growth rate (CAGR) of production for the decade ending 2005-06 is 8%. All major categories of automotive tyres like trucks, bus, jeep, tractor, motor-cycle, passenger car, light commercial vehicle, animal drawn vehicle, scooter and moped are being manufactured in India, except Aero tyres. Taking the previous growth level in to account, resurgence in G.D.P. growth, vehicle production growth, etc., itis estimated that Indian tyre industry will grow at 10% per annum in near future. Table 3.2 Tyre Export Tyre Exports 2002-03 | 2003-04 | 2004-05 | 2005-06 Value of Exports (Rs.Crores) 1250 1460) 1834 | 2294 No. of Tyres Exported (Lakh Nos.) 3444 | a103 | 50.67 | 53.88 Truck & Bus Tyres (as a% of Total Exports) | 62% 55% 49% | 45% Truck & Bus Tyres Exported (as a % of 22% 21% 23% 20% Domestic Production of T&B Tyres) 68A perusal of the above table shows that the performance of Indian tyre industry on the export front has been creditable. In the key truck and bus segment Indian tyre industry export more than 20% of its tyre production. The average annual compound growth rate (CAGR) of export for the decade ending 2005-06 is 11%. Tyre exports are done to over 65 countries worldwide including highly quality conscious US market. Indian tyre industry exports mainly to U.S.A., UAL Pakistan, Philippines, Iran, Bangladesh and other countries. This consistent and large volume of export had over the years instilled confidence among the large tyre companies about the ability of successfully competing in world markets. If we can compete in world markets, then we ‘can compete with the tyres being imported into India. Export of passenger car radial tyres started a few years hack is expected to gather momentum. This would be followed by export of truck / bus radial tyres, though not in large volumes. That would happen later when Indian truck / bus radial tyres establish export markets, may be to some extent piggy riding on the acceptance level of bias tyres exported from India. TRADE POLICY - IMPORTS AND EXPORTS The salient features of trade policy are — © Allcategories of tyres can be exported freely; * All categories of new tyres can be imported freely. No WTO Bound Rates for tyres and tubes; © Import of Second hand / Retreated tyres (major categories) is ‘restricted’ under EXIM Policy and can be done against an Import Licence; 69