[atnyia]

OT Rant:

Make In India should never have meant import controls. Anti dumping and import controls have different objectives, mechanisms and consequences. Our policymakers seem to be blissfully unaware of the difference.

One of the main criticism of some of the policies is that they are good and noble to talk about but end up in horrible implementations.

Michelin is still okay. We still have world class JK tyres. They are pretty good for cycles.

What about the guy who took a 25 Lacs loan to setup a business and now in the way of such masterstroke policy decisions? He is screwed both ways. Can't procure product and can't pay banks.

[anb]

Originally Posted by ostreichwein

While I understand that there might be some amount of skepticism towards Chinese companies profiteering through dumping in India, but Michelin is headquartered in France and they produce in China, just as most international manufacturing companies!
Apologies for the slightly OT rant!

I use Michelin tyres in my 3 cars. None of the tyres are manufactured in China. They are made in Thailand

[kaushikduttajsr]

This feels like going back to the era of license raj

[wildsdi5530]

What does import restrictions on tyre sizes made in India mean? Most common tyre sizes are available by Indian manufacturers.
So if I want 175/65 R14, I have to stick to MRF, JK tyre or Ceat? I'm not allowed to buy any other better brands?
@nikhil Can Michelin import the tires after changing the size marked to 176/65 R14? and also for other common sizes?

[RaceHorse]

During lock down time, all Michelin dealers have exhausted their tyre stock, and even after lock down time they kept giving the reason that,
ships with containers having Michelin tyres were not getting the permission to embark.

After nearly waiting for 2 months finally I went with Yokohama BlueEarth-GT tyres which were manufactured in India.
They are not great as Michelin Primacy series, which I wanted, but doing decent job.

[FriendlyOwl]

Just sharing some pointers on the Indian tyre and rubber market, which I believe may add some value on the discussion happening in this forum.

So as part of Masters, I analysed the business and share prices of Goodyear India in 2016. So the basic gist was Indian tyre manufacturers were facing headwinds because of the following reason:

1. Root of the problem - Excess natural capacity globally, because of a large increase in tyre plantations in Malaysia. As a result, global rubber prices had crashed. So invariably Natural Rubber prices collapsed in India. Refer to the image below:
   
   
   
   Link for further reading: http://tionghuatrubber.com/global-na...rket-analysis/
   
   For even more gyan (refer to page 12 and 14 if you want gyan in moderate amount): https://www.accenture.com/t20150523T...ng-Markets.pdf
   
   
2. Support price is given to rubber farmers in India by imposing excise duty on imported rubber. This inadvertently increased raw material cost for tyre manufacturing in India
   
   
3. Duty subversion on import of completely made tyres. Due to free trade agreement between India and some Asian countries, it became cheaper to import completely manufactured tyres rather than manufacturing tyres using either Natural Rubber procured from abroad or India. Exact details: Tyres imports under Regional Trade Agreements (Asia Pacific Trade Agreement, Indo-Sri Lanka, SAFTA, India-Singapore, ASEAN, India-Malaysia etc) allowed at preferential rates of import duty
   
   
4. ATMA or Automotive Tyre Manufacturing Association for a long time lobbied for higher duties on import tyres
   Link for reading on ATMA's stance - https://timesofindia.indiatimes.com/...w/76260268.cms

If you have reached the end of this post, thanks a lot for the having patience for reading it completely.

In case there is any factual error or any other mistake please feel free to point it out.

[kranti]

Originally Posted by Nikhilb2008

Limited numbers in 15 and 16 inches but good numbers in 17" and above. Supposedly, Michelin will be focusing on premium cars and sizes and they plan to introduce many new sizes in 17", 18" and above. They have asked me for my wishlist and I am in the process of giving them my wish list.

Nikhil, would be really grateful if you include 225/55 R18 (for Tucsons) in your wishlist.

[stanjohn123]

Originally Posted by FriendlyOwl

[*]Root of the problem - Excess natural capacity globally, because of a large increase in tyre plantations in Malaysia. As a result, global rubber prices had crashed. So invariably Natural Rubber prices collapsed in India. Refer to the image below:

Attachment 2112370

Link for further reading: http://tionghuatrubber.com/global-na...rket-analysis/
[*]Support price is given to rubber farmers in India by imposing excise duty on imported rubber. This inadvertently increased raw material cost for tyre manufacturing in India

.

If I am not mistaken , the Indian rubber prices crashed as soon as UPA signed the trade agreement which allowed the import of Malaysian rubber into the country. So then Indian rubber prices were always in tune with Malaysian Rubber price ( Landed cost ).

So Tyre manufacturers are actually getting their raw materials at very cheap price and the Indian rubber farmer is not really benefiting because they are paying the same labor costs when rubber was at 240 Rs per kilo, whereas now it is just 110-120Rs per kilo.

I think India must get out of this trade agreement and increase import duties on fully imported tyres,and at the same time for local manufacturing they must stop import of imported rubber and use only local natural rubber.

[avira_tk]

Originally Posted by stanjohn123

If I am not mistaken , the Indian rubber prices crashed as soon as UPA signed the trade agreement which allowed the import of Malaysian rubber into the country. So then Indian rubber prices were always in tune with Malaysian Rubber price ( Landed cost ).

So Tyre manufacturers are actually getting their raw materials at very cheap price and the Indian rubber farmer is not really benefiting because they are paying the same labor costs when rubber was at 240 Rs per kilo, whereas now it is just 110-120Rs per kilo.

I think India must get out of this trade agreement and increase import duties on fully imported tyres,and at the same time for local manufacturing they must stop import of imported rubber and use only local natural rubber.

The rubber planter loses whichever way this goes, the problem is, this protection racket paid for by domestic tyre manufacturers is easy to coordinate between them. The rules of the game should be simple, raw material and the finished product should operate in a free market, if either one can be imported, there should be no restrictions on export either. The top domestic brands should stick to their speciality, substandard products for the replacement market, and leave the quality stuff to people who know what they are doing.

[Turbohead]

Originally Posted by stanjohn123

I think India must get out of this trade agreement and increase import duties on fully imported tyres,and at the same time for local manufacturing they must stop import of imported rubber and use only local natural rubber.

We still stand to lose! This will not encourage manufacturers to set up a plant in India as they can only supply to the local market as the products will be too expensive to export. And with low volumes, tires will be even more expensive.

[FriendlyOwl]

Originally Posted by stanjohn123

If I am not mistaken , the Indian rubber prices crashed as soon as UPA signed the trade agreement which allowed the import of Malaysian rubber into the country. So then Indian rubber prices were always in tune with Malaysian Rubber price ( Landed cost ).

So Tyre manufacturers are actually getting their raw materials at very cheap price and the Indian rubber farmer is not really benefiting because they are paying the same labor costs when rubber was at 240 Rs per kilo, whereas now it is just 110-120Rs per kilo.

I think India must get out of this trade agreement and increase import duties on fully imported tyres,and at the same time for local manufacturing they must stop import of imported rubber and use only local natural rubber.

I humbly beg to differ from your analysis, due to the below mentioned reasons:

1. Approximately 70% of Global Natural Rubber supply is concentrated in Thailand, Indonesia and Vietnam. India only accounts for ~5% of total production. Refer link for more details: https://www.google.com/amp/s/www.the...96011.ece/amp/
   
   
2. The global supply glut in rubber was caused by over-enthusiastic rubber plantation under taken in South East Asia circa 2007-09, when global rubber prices peaked. The rubber tree mature in 5-7 years so circa 2014 the world was over supplied with natural rubber
   
   
3. Indian rubber based industry depends on imported rubber. Rough figures: India produces 700k tonnes of rubber and we consume 1200k tonnes of rubber in 2019-20
   Link for further reading: https://www.indoasiancommodities.com...-rubber-board/
   
   
4. Since we import nearly 40% of natural rubber our rubber producers can't be immune to global natural rubber prices. Moreover, since we only produce 5% of global natural rubber we can be never be the country who can control the prices globally
   
   
5. India has very limited area which is conducive for rubber tree plantation. Most of India's production is concentrated in Kerala.
   
   
6. Rubber tree plantation like all cash crop plantations are bad for the environment as they reduce multi species forrest into a single species forest. If you may recall that is the reason globally environmentalist are lobbying against Palm Oil. So increasing Natural Rubber production in India will cause two problems, deflate prices further because of global supply glut and destroy our precious and limited high quality forests into economically unviable rubber tree plantations
   
   
7. Globally none of the major tyre manufacturing or developing country is a major producer of natural rubber. The largest players in tyres are Bridgestone (Japan), Micheline (France) and Goodyear (USA). So become a major player in Global Tyre industry is more technology dependent and rather than access to natural rubber locally.
   Link for further reading: https://www.carlogos.org/reviews/lar...facturers.html
   
   
8. So for India to become a major player we need to incentivise the industry to invest more in production and R&D and ensure that they have access to Natural Rubber at globally competitive prices. We currently export very limited quantity of tyres globally, but the scenario is changing for the good slowly. At the same time we need to ensure that our farmers are compensated for their losses. Our farmers could also be incentivised to move away from Rubber plantation to much more profitable crops in the long term, as anyways access to natural rubber locally isn't a competitive advantage for the tyre industry.

Apologies for typos and grammatical error as I have typed this from my cell phone.

Once again I request readers to point out any factual error made by me.

Thanks for having the patience to read my lengthy posts.

[avira_tk]

Originally Posted by FriendlyOwl

I humbly beg to differ from your analysis, due to the below mentioned reasons:

1. The global supply glut i... supplied with natural rubber
2. Indian rubber based industry depends on imported rubber. Rough figures: India produces 700k tonnes of rubber and we consume 1200k tonnes of rubber in 2019-20
3. Since we import nearly 40% of natural rubber our rubber producers can't be immune to global natural rubber prices. ..
4. India has very limited area which is conducive for rubber tree plantation. Most of India's production is concentrated in Kerala.
5. Rubber tree plantation like all cash crop plantations are bad for the environment as they reduce multi species forrest into a single species forest. If you may recall that ... high quality forests into economically unviable rubber tree plantations
6. Globally none of the major tyre ...dependent and rather than access to natural rubber locally.
   
7. So for India to become a major player we need to incentivise the industry to invest more in production and R&D and ensure that they have access to Natural Rubber at globally competitive prices. ... term, as anyways access to natural rubber locally isn't a competitive advantage for the tyre industry.

Rubber trees mature in 7 years, they hit peak production only by 10 years on average, so the rubber prices crashed much before the production hit the market. The rubber prices peaked much after 2007, planting has really nothing to do with high prices, no one can see which way prices will go after a decade.

We have protection in place for industries who want to import raw material to beat down prices locally. The same cronies then want protection for the finished product, adjusted for inflation natural rubber(key input) prices are down 75% over a decade, yet they seem unable to compete in a free market.

Kerala has rules against using rubber plantation areas for any other crop, farmers are stuck with it. This ensures a captive supplier base with no other option than to run up loses to supply domestic companies. Rubber plantations are coming up in the North East this just ensures that prices will be depressed as higher production guarantees less income for price takers for any commodity.

Global environmentalists don't have to work for a living, every form of agriculture will affect the environment. I don't know how cash crops are the villain here, industrial agriculture does the same. Environmentalists promote soy consumption to save the rain forest from meat farming, soy i grown in cleared rainforests, go figure. You oppose forests being cut down while living in a large city, how do you suppose the cities are supplied from the countryside?

Rubber is a key industrial input, when prices are down, it means there isn't much industrial activity taking place. Indian tyre companies have access to the lowest cost natural prices, how much further down do we need to go? The reason we have such pathetic companies is that they have always operated without technical competence, always dependent on political favours to bail them out of a tough spot. Farmers needn't be compensated, just allowed not to grow rubber, the market will sort itself out.

PS : I live in a rubber plantation, so any input here is at a personal level, not research papers.

[itwasntme]

Being a luxury sedan (with 17" tyres) owner myself and worked/working in Big 4 audit firms and foreign MNCs, anything which gradually localizes production in India is good in the long term. Given a free market with a single-minded focus on maximizing shareholder returns, very few corporates will willingly lower their bottomline in order to accomodate domestic manufacturing.

Mind you, I am not approving the methods - I am only highlighting that the end (outcome) is desirable from multiple angles. With private enterprise sometimes the best bet is to grab them by a family jewel and their hearts and minds will follow.

I personally am very happy to read news like the following:
Yokohama:
https://auto.economictimes.indiatime...-year/49871370

Apollo - Vredestein:
https://www.autocarindia.com/car-new...n-india-418244

Continental CC6 & UC6:
https://www.business-standard.com/ar...1801441_1.html

MRF Perfinza:
Even the much maligned MRF managed to impress many folks right here :-): https://www.team-bhp.com/forum/long-...ml#post4295795

[GTO]

Thanks to the Team-BHP fan (he prefers to remain anonymous) who sent this information in. Heartfelt gratitude for sharing it with other enthusiasts via this page!

Dear GTO,

This is with regard to the following thread - https://www.team-bhp.com/forum/tyre-...m-dealers.html

I’d like to provide generic non-confidential information with regard to this.

The new mechanism of import is like this -

1. A dealer applies for import to the govt with a size list, for example, like - 175/65R14 82T, 185/65R15 88H, etc.

2. Govt forwards this list to ATMA (Association of Tyre Manufacturers) who in turn forward this list to the person in charge in each member company to get the information whether they produce this size, and if not, how long it would take for them to produce it.

3. If any of the member companies say yes, the application for import is denied. If anyone says no but they plan to release this size in six months, import licence is granted for six months for that particular size.

This means that the popular Indian vehicle sizes for sure cannot be imported, like 195/55R16 87H or 215/60R16 95H.

Regarding the sizes for luxury vehicles, domestic manufacturers (JK, Apollo, MRF) would have the popular sizes for sure, like 225/50R17 (C Class) for example, but before this restriction, we would obviously only sell small numbers, which has now changed because of this rule.

Only the most rare and niche sizes which Indian companies didn’t bother investing in (because they wouldn’t sell many tyres) will be allowed to be imported.

In a nutshell, for the common sizes for regular vehicles, if BHPians want to go for a global brand, their only options would be Bridgestone and Goodyear as they are the only ones with large manufacturing capacity here. Yokohama also has a plant but I’m unaware to the extent to which they have ramped up production.

For the fancy and niche sizes (especially runflat tyres), dealers have no choice but to import as even Bridgestone and Goodyear don’t produce these sizes in India, and so BHPians will not face a big problem getting global brand tyres of these sizes.

[stanjohn123]

Originally Posted by FriendlyOwl

I humbly beg to differ from your analysis, due to the below mentioned reasons...

I would also beg to differ on some of your points. Research papers aside I can only explain from practical experience since we own and live around rubber plantations.

When rubber prices were at its peak we did a very foolish thing of converting acres of our lands from Coconut plantations to rubber plantations. But by the time the trees matured , the prices crashed drastically and labor rates stayed the same.

This obviously gave us 3 options now, either start taking rubber from the trees for whatever peanuts we get now after paying off labor salaries , or wait it out till rubber prices peak again or last option is to just leave the trees for slaughter ( meaning someone will fix a price for each tree and they'll take all the rubber milk using chemicals and then cut and sell off the trees ).

In all these options, the loss is clearly for the farmer or owner ( The labor cost and fertilizer cost involved in growing these trees are also very high ). Most people have stopped taking rubber and some have started felling their trees or giving for slaughter. So whatever you say, the govt is not supporting any farmers and it's only further encouraging importing which again hurts our GDP.

We have huge demand for rubber within India itself but instead of encouraging local production , we are encouraging imports. But it's too late since people realized that investing in rubber is a waste of time and money and even if rubber prices increases again people will not do the same foolish thing because by now it is clear everything is done for the competitive advantage of few crony corporates.

Also environmentalists seem to be more bothered about rubber plantations destroying environment rather than much harmful chemical factories killing our people.

In a way I can empathize with the farmers who are protesting against the government today because they clearly understand now that , behind all the hogwash of development for the country, the real development is only for crony capitalists. Farmers will always take the backseat.