Mumbai: Bucking the lacklustre trend in the stock market, shares of tyre firms rose on Tuesday as the government imposed duty on imports of Chinese radial tyres with rim above 16 inch.
JK Tyre & Industries Ltd and CEAT Ltd shares rose 4.7% and 3.2%, respectively, on the National Stock Exchange (NSE). Above 16-inch rim refers mainly to heavy truck and bus tyres. Shares of Apolly Tyres Ltd and MRF Ltd rose by 1.2% and 2.6%, respectively.
According to Rajiv Buddhiraja, director-general, Automotive Tyre Manufacturers’ Association, “Anti-subsidy countervailing duty has been imposed now in addition to the anti-dumping duty prevalent already on Chinese truck and bus radial imports. This is on grounds that the Chinese government grossly subsidises tyre exports."
The notification therefore spells out names of Chinese tyre firms that are entitled to such subsidies.
The government’s decision may have come in the wake of a slowdown in the domestic auto industry. With auto sales falling sharply, it is bound to impact original equipment sales of tyre firms. Replacement market sales could help offset the pain if competition from Chinese tyres is reduced.
Also, given the slowdown in the auto industry globally, it is likely that Chinese firms would resort to more dumping thus aggravating the pain for domestic manufacturers.
However, “while this (the government’s step) is indeed positive, the potential threat of Chinese firms using Thailand and Vietnam for stepping up exports to India continues unabated", Buddhiraja added.
However, one must note that Chinese tyre imports have come down to about 30,000 units per month from 1.5 lakh units per month two years ago.