What is the primary role of ATMA and who are its members? What are the
criteria to become an ATMA member?
As the name suggests, ATMA
stands for Automotive Tyre Manufacturers’ Association. We are an industry body
of the companies which make automotive tyres in India. We have been there since 1975. It’s almost
forty years now. It’s an industry
association of large tyre companies in India. Most of the large tyre
manufacturers are also manufacturing Off the Road (OTR) tyres, which includes
the farm tyres, the mining tyres, industrial tyres etc. There are a number of
tube manufacturers who are stand alone small tube makers who are either
supplying to large tyre manufacturers or are supplying in the aftermarket. But
these companies are not members of our association.
To become a member of ATMA,
one has to have a manufacturing facility in India. One also has to have a
certain size and scale in turnover. The turnover of the company has to be Rs
500 crore or above. The company should be manufacturing either 100,000 tyres
annually for the truck and bus category or 2 million passenger car tyres
annually. That sets the membership criteria for the membership.
How many members does ATMA have currently?
We have ten members in all
which is a fair mix of home grown Indian companies as well as global players
who have set up their plants in India. Among the global players we have
Michelin, Bridgestone, Goodyear and Continental. These global majors have a
manufacturing presence in India.
Yokohama is the latest globally company to apply for membership. In a
month or so this should come through. They have a manufacturing facility which
came up last year. This makes them eligible for membership to ATMA.
What is the current turnover of the automotive tyre industry in India?
What has been the progress of this industry?
The industry turnover for the
last fiscal 2014-15 is approximately Rs 50,000 crore. Most of it is accounted
by the commercial vehicle segment. I put that around 55pc. The next big
contributor is the passenger car segment, followed by two / three wheelers and
light truck tyres, farm tyre etc. The share of the commercial vehicle segment
at one point was around two-thirds, almost 66pc. Over the years this share has
declined and paved way for the passenger car segment.
With global acquisitions and massive exports, do you think tyre
companies in India have finally come of age in terms of financial clout and
world class technology?
For a successful tyre company
you have to have the size and the scale. That is what Indian tyre companies
have also realised that it is important to have a certain size and scale and
once you achieve that the next step that follows is have a global presence.
That is what is driving Indian tyre companies. Three of the large Indian tyre
companies are among the top 20 or 25 global tyre companies. Their position is
only going to be further strengthening in years to come.
What about government policies, are they encouraging or discouraging
the Indian tyre industry?
As an industry association we
feel that the government has not given the tyre industry the encouragement and
support it so rightly deserves. One of the key issues that confronts the tyre
industry is a very long outstanding issue of correcting the inverted duty
structure. We are in a situation where the customs duty on our principal raw
material i.e. natural rubber is now 25pc. Until the budget it was 20 pc. Post
Budget it was hiked to 25pc, perhaps the highest in the world. The customs duty
on finished tyres is anywhere between zero per cent to 8.6 pc under various
preferential and concessional tariffs by virtue of trade agreements. It is a
very anomalous situation that we have in the tyre industry where the principal
raw material duty is almost three times that of the finished product. As a
result we are seeing this huge influx of cheap imported tyres coming into India
especially dumped from China. It is rather unfortunate if I may say, this has
not received the attention of the government in a manner that it deserves and
for the last many years both as an industry body as well as a tyre company we
have been approaching the government but a solution still eludes us.
What about anti dumping laws?
We do have such laws but
unfortunately the process is so long that it becomes virtually impossible to
stop it. We have anti dumping duties for truck and bus bias tyres but it took
anywhere between one and a half to two years to have that in place. Once the
duties were imposed on the biased tyres, then the importers switched to import
of radial truck tyres which is now the major segment where companies have
invested a much as Rs 25000 crore in the last four to five years to set up
manufacturing capacities in India. It is very ironical that the industry has
made huge investments in capacity creations both for new projects as well as
for expansion but unfortunately the dumped imports coming into the country continues
to be a serious concern.
What is the situation on the raw material front?
Rubber prices have been stable
if I may say in the last three to four years. They have declined from the peak
levels that were there in 2011. But even at these prices which are
comparatively lower than the prices that prevailed in the recent years, rubber
in India is anyway 15 to 20pc higher compared to international prices. That is
a very major concern for the tyre industry. More than the prices, it is the
availability. The demand for rubber today far exceeds the availability not only
for the present but also the medium and long term. As a result imports are the
only way out for the industry and that is where the duty impacts the industry
very severely. Here we are in a situation where the domestic availability of
rubber is inadequate and the quality is not up to the mark to meet the
requirements. These are the changing requirements of the industry for new
quality and new technology of the products like radial truck and passenger
tyres. The third issue is the on the duty front. All these three are impacting
the tyre industry in its operations.
Where is rubber sourced from in India? Is it primarily Kerala or are
there any other states which produce rubber?
Around 90 to 95 pc of rubber
in India originates from Kerala. Though the government has endeavoured to move
into North East for growing rubber, but unfortunately considering the potential
that exists from rubber cultivation, the actual cultivation is a mere 25pc of
that. There is still a very large untapped resource which has not been
exploited in larger natural national interest.
What is the situation in Kerala both on the production and quality
front in rubber?
First of all, as well all
know, land is very scarce in Kerala. It is oversaturated on use of land and
resources. We are not seeing a lot of replanting and new planting of rubber in
the state. This is mainly because of the other pressures that are there on land
like building infrastructure, promoting tourism etc. It is also a question of
very limited manpower which is now left for skilled operation in the rubber
sector. Tapping, for instance, is a very highly skilled job. Not many people
are coming forward to go in for tapping. There is a huge gap between the older
generation of highly skilled tappers and a new generation which is not coming
forward. Also, because of the low prevailing prices, there are not enough
inputs that are going into this sector. The small growers are refraining from
better cultivation and farming practices that include rain gardening, use of
better manure and utilisation of better seeds etc. Thus land is under pressure,
manpower is not there and the current level of prices is not supporting the
activities that should have happened in the farm sector. Import of rubber is
the only way for the Indian tyre industry.
We have enough capacity created for tyre manufacturing within the
country. Now a prudent policy says that value addition should take place within
the country. So you have a choice whether to import rubber in to the country
and value add it within India or you could have tyres coming into India and see
your capacities that have been built with large investments say idle. From a level of 90 plus utilisation industry
today is down to 60 to 65 pc. All this is happening because on the raw material
front the industry is under pressure in terms of adequacy, quality, etc which
is not coming forth. And on the other hand the finished goods both tyres and
other non tyre rubber goods are flooding the Indian markets.
Is India seeing increased radialisation of tyres?
Yes, in the passenger car
segment, radialisation has happened fully. The current level of radialisation will be around 97pc to 98pc.
In another two to three years perhaps it will be 100pc. Even the cheapest cars
rolled out by the OEMs are all fitted with radials. There is an old fleet of taxis still
operating that may be donning bias or cross ply tyres. In the commercial vehicle
segment, i.e. the truck and bus segment, although we started off late a
compared to other countries, I must say India has done remarkably well and we
have reached a level of somewhere around 35pc. This would have been actually
far higher as a percentage had it not been for the slowdown that had happened
in the CV segment. Radialisation
normally happens with the OEMs but as we know the CV segment virtually nose
dived in the last four years and because of that the process of radialisation
got somewhat delayed. But I am sure the numbers are now looking up, production
is coming back to earlier levels and this would gain momentum further.
How do you see the tyre industry panning out in the near future?
Everybody is very upbeat about
the future, for the Indian economy in general, for the automotive sector in
particular, and that is because of a host of factors. One, as are economy we
are poised to grow. The government is
going all out to ensure that whatever momentum we lost is not only regained but
is also accelerated. Lot of investments are going into infrastructure, into
mining, into highways, ports, roads etc and we know that once the economy gains
traction it is the automotive sector which is the key driver. If the automotive
sector grows, it is but natural that the component industry and the tyre
industry would also be a part of that progress. If you are talking about a
medium to long term outlook, it is indeed positive and we expect the tyre
industry to grow almost in sync and almost in same line as GDP growth. If the
country grows at 7pc to 9pc, we would expect a similar or even a double digit
growth for the tyre industry in the years to follow.
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