KARACHI: The Indian tyre industry is gearing up to capture world markets, while Pakistani counterparts are finding it hard to operate even in domestic market, which is 80 per cent dominated by smuggled and imported tyres.

The local companies, not producing at their optimum capacity, provide tyres to assemblers/manufacturers of car, bus and trucks amid stiff competition from smuggled and imported brands because of price difference.

There are 40 listed tyre companies in India against total eight companies in Pakistan and of which only one is listed and manufactures passenger radial tyres. Two companies manufacture tractor tyres while the rest are producing motorcycle tyres.

Experts believe that Indian government’s support is key to the success of tyre industry there.

A tyre industry official said Pakistani government loses around Rs50 billion annually due to anomalies in customs rules and slackened control on curbing malpractices while tyres worth around Rs15-17bn are smuggled into the country every year.

The tyre market can easily absorb new entrants, but thriving smuggling coupled with higher import trade prices (ITPs), law and order and infrastructural issues along with inconsistent policies haunt potential investors, he said.

Sources said prudent long-term and industry-friendly policies have made Indian companies to manufacture their products in foreign locations and capture European and American markets. India’s Apollo Tyres landed in Northern Hungary to build a tyre factory with a capacity to produce 5.5 million passenger car and light truck tyres and 675,000 heavy commercial vehicle tyres per annum for the European market, including Russia and Turkey.

Likewise, the top Indian tyre manufacturer, JK Tyres, after buying Mexican tyre maker (Tornel S.A.), is finally ready to roll out JK-branded car and light truck tyres starting around mid-2015, after a $45 million expansion of Tornel’s manufacturing capacity in Mexico City.

While in India, Michelin, a giant tyre company of France, has become a bigger player in the Indian two-wheeler market and it is expanding its product portfolio there. The said company is setting up a plant in Chennai to produce radial truck and bus tyres.

Similarly, German tyre maker Continental has started local production as well as exports from India. The Hannover-based firm is also looking to expand its product offering in the passenger vehicle radial tyre segment apart from entering into the construction equipment tyre category.

A tyre industry official said improvement in law and order situation, continuous supply of power and gas, low cost of production and curbing smuggling at the borders would attract foreign direct investment.

Published in Dawn, April 28th, 2015

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