Updated: Jul 1, 2020
Support to Tyre sector could set the wheels of economy in motion: Anshuman Singhania
What has been the impact of lockdown on Tyre Industry and how the industry is aligned with the new vision of Modi Government titled Aatma Nirbhar Abhiyan? Auto Track caught up with Anshuman Singhania, Vice Chairman of Automotive Tyre Manufacturers Association (ATMA) for an online interaction:
What is the extent of impact of Covid-19 pandemic on Tyre Industry?
As borne out by a recent FICCI survey and projections made by several agencies, the Covid-19 pandemic has had a deep impact on Indian businesses which could affect Indian economy severely in the near to long term. The surveys have brought to the fore what businesses, cutting across segments, have been realizing ever since the Corona outbreak led to shuttering of enterprises and disruption of supply chains.
For instance, Tyre industry is poised to lose sales of nearly Rs 10000 crore for nearly 40 days of lockdown and the time required to resume the operations. Moreover, there is huge blockage of funds by way of inventories of raw materials and in the form of finished goods. Many OEMs have asked for deferment of payments and realizations from the replacement market have dried out.
What are your expectations from the Government?
While a major fiscal stimulus has been announced by the Government to revive the economic cycle, MSMEs, NBFCs and Agri sectors have been the direct major beneficiaries of the stimulus which will, indirectly, increase demand for a host of products including tyres.
However, in our view, a direct financial stimulus is, indeed, desired in view of the huge financial impact on auto & tyre sectors who had been facing exceptional distress even before the arrival of the current pandemic. As per the latest data available, the production of all major categories of tyres in FY20 has shown de-growth with some like Truck & Bus tyres contracting in double digits.
How do you view Government’s stance on Self-reliant India?
It is heartening to note Government’s resolve to fight back with full might. Hon’ble Prime Minister has exhorted his Cabinet that Government must work on war footing to mitigate the impact of Covid-19 and strategize for the emergent conditions. However, what is of greater significance is PM’s advice to lessen the country’s dependence on other nations and give a sincere push to 'Make in India' as a long-term strategy to immune the country from external trade shocks. He has emphasized on boosting India's manufacturing and exports to benefit from emerging world realties.
How do you think Tyre Industry befits the Government plan of Aatma Nirbhar Bharat Abhiyaan?
Tyre Industry has a strategic fit with Aatma Nirbhar Bharat Abhiyan. For one, Tyre Industry is self-sufficient in India with indigenous capacities to manufacture practically all kinds of tyres from a moped tyre to mammoth off-the-road tyres. Not many countries in the world can boast of this capability.
Not only has the Tyre Industry worked for a self-reliant India ever since independence but has emerged as a major exporter with Indian manufactured tyres being exported to more than 100 countries in the world including the most discerning ones such as US and European countries. Exports of tyres from India are in the range of Rs 12000 crore per annum (nearly 20% of the industry revenue).
Job creation potential of the Tyre Industry is huge in view of a rich value chain extending from rubber planters to tyre mechanics. Industry supports over one million Natural Rubber (NR) planters since as much as 75% of the NR produced in the country is consumed in tyre manufacturing. Another million or so are engaged in tyre manufacturing, tyre retreading and those employed at tyre dealerships and tyre repair services across the length and breadth of the country.
There is a rising chorus against China. Do you think Indian Tyre Industry can replace China as tyre exporter to several such countries?
Yes, Indian Tyre Industry can leverage the current opportunity and replace China in several key markets only if production and exports are provided a policy push by the Government and bottlenecks are removed. China enjoys huge economies of scale as far as tyre manufacturing is concerned. Actually China has provided large export incentives to its tyre companies since the manufacturing capacity in China is many times that of its domestic requirements. To insulate its companies from the vagaries of fluctuation in Natural Rubber prices and availability, China is maintaining large reserves of rubber as a state policy.
So if Indian Tyre Industry gets support much in the same way that Chinese Government has been providing to its tyre companies, production and exports of tyres will certainly get a fillip since the quality of Indian tyres has received worldwide acclaim.