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India to import pneumatic tyres from China and other countires

In a relief to automobile manufacturers, Indian Director General of Foreign Trade (DGFT) has started issuing import licences for pneumatic tyres bought from China and other countries, two people directly aware of the development told Mint. So far, Hyundai Motor India Ltd, Honda Cars India ltd, MG Motor India ltd, Skoda Auto Volkswagen India Pvt Ltd, Bajaj Auto Ltd have received the import licences from the trade watchdog, the people mentioned above said.

In the aftermath of the border clash with China that led to the death of 20 Indian soldiers, the Centre, in June, had placed import of tyres under restricted category.

This essentially means that original equipment manufacturers (OEMs) and importers for after-market will require a licence to continue importing them. Though the restriction is for imports from all countries, most such tyres are sourced from China.To avert disrupting production, automakers had urged the DGFT to allow import of superior quality tyres, typically not manufactured in India.

India's move was also intended to prevent dumping of low-quality tyres from China in the after-market space.

Mint, on 9 August, had reported that DGFT had asked as many as nine automobile manufacturers to submit data pertaining to volumes and different sizes of tyres imported on an annual basis before granting licences.

According to one person cited above, DGFT began issuing permits over the last six to eight days after going through the applications submitted by manufacturers.

"They have received more than 100 such applications not only from the automakers but also from importers of premium tyres. Most manufacturers were concerned about getting the licenses after the deterioration in bilateral relations with China. Some of the manufacturers though are still waiting for the license," said the person, requesting anonymity.Most manufacturers of premium vehicles use a certain quality of pneumatic tyres which are not manufactured in India given low sales volumes. Such tyres are also used for vehicles meant for exports.

Luxury passenger vehicle manufacturers Like Mercedes-Benz, Audi, and BMW, have significant quantities of imported content compared with mass market manufacturers. Also, most of these companies follow a global sourcing model for their factories across the world and a decision to localise manufacturing of components depends on the opportunities in the domestic market and potential to export.

Queries sent to Hyundai Motor India Ltd, Honda Cars India ltd, Skoda Auto Volkswagen India Pvt Ltd, and Bajaj Auto Ltd on Monday remained unanswered. A spokesperson of MG Motor India did not want to comment on the development.According to the other person, cited earlier, licences were first given to companies which import tyres for vehicles meant for exports, with the trade watchdog also scrutinising the type of tyres being imported and local availability.

"Officials were supportive of the automakers right from the beginning and were not opposed to granting licenses. They just wanted to know why these tyres were imported, the quantum of imports for every company and why these tyres were not manufactured in India. Most companies had applied for the import license the week after DGFT put tyre import in the restricted category," said the person, also requesting not to be identified.

German carmakers like Mercedes-Benz India Pvt Ltd, BMW Group India and Skoda Auto Volkswagen India Ltd had also approached Germany’s Indian ambassador to help resolve the issue of tyre imports."The decision taken by the Indian government to ban tyre imports was a hasty one and was not taken with proper understanding of the issue. Hence, it is not surprising that licences have been granted to automakers. These tyres were not available in India, so importing them is the only option available. The decision would have caused inconvenience to some of the carmakers and the government understood that," said Avik Chattopadhayay, founder, Expereal, a brand consultancy firm.

Live Mint