Government of India restricts import of tyres to India

All tyres that were previously sold in India had no restrictions
Importers now will have to take a license from DGFT for tyres
GOI has made this move to push forward Indian tyre manufacturers

In a recent announcement, the Government of India has imposed restrictions on imported tyres in the
country. The move comes to play in order to push forward the locally manufactured tyre manufacturers.
While this move gives an upper hand to Indian tyre manufacturers, it will affect imported tyre makers as
this restriction also affects passenger vehicles. This segment is one of the largest consumers of imported
tyres, especially the ones made in China owing to its competitive price.

Now, importers will have to get a license from the Directorate General of Foreign Trade (DGFT) and post
the permission, importers can sell imported tyres in the country through the set chain of distributors.
This would translate into a higher cost of an imported tyre over the same tyre made by an Indian
manufacturer such as JK Tyre, Apollo and others. Most of the import of tyres came from China owing to
the lower cost of purchase, although reliability and longevity was still a big question for such products.
Brands like Kenda and LingLong will have to take a hit as now, they will go expensive.

Another factor that has to be taken into consideration is how most of the Indian tyre market is
disorganized. This would also mean that these tyres may make it to the local tyre shop, albeit, illegally if
sold without requisite permission and will no longer be cost-effective.

This will greatly affect the import business in terms of finances. The new import restriction will further
affect the imported tyre market in India as during the tenure of April 2019 to February 2020, the
imported tyre industry imported tyres worth USD 260.72 million as compared to USD 330.72 million
over the same tenure from April 2018 to February 2019.

Although, a good move to help domestic tyre manufacturers, the challenge is the availability of variety
across the board of all tyre types, in the passenger vehicle segment. Some vehicles need tyres specific to
a purpose which are currently unavailable with such as extreme off-road tyres specific to challenging
terrain or tyres specific to track racing which have a sticky compound for added grip. On the contrary, it
provides an opportunity to the homegrown tyre manufacturers who can now explore new
opportunities.

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