Luxury Auto Manufacturers and Exporters Pressurize DGFT for Easy Licences for Tyre Import from China

· Though the restriction is in general for all tyre imports, most tyres imported by either OEMs or for the after-sales market are sourced from China

· India has put import of tyres under the restricted category, which essentially means OEMs will require a licence to continue importing them

The Directorate General of Foreign Trade (DGFT) has asked nine automakers to submit details of their annual tyre imports as the government continues efforts to squeeze imports from China amid worsening relations between the two countries.

In a meeting last week, the foreign trade watchdog also asked the automakers to explain the reasons behind importing tyres for their vehicles manufactured in India, said two people directly aware of the discussions.

Based on the submissions of these companies, DGFT is likely to take a decision on issuing licences to these companies to import tyres in the current financial year.

Hyundai Motor India Ltd, Eicher Motors Ltd, Bajaj Auto Ltd, MG Motor India Pvt. Ltd, Honda Cars India Ltd, Mercedes-Benz India Pvt. Ltd, BMW Group India, Skoda Auto Volkswagen India Pvt. Ltd and Jaguar Land Rover India have applied for licences to import tyres from China and were also present in the meeting with DGFT. Representatives of industry body Society of Indian Automobile Manufacturers (Siam) also attended.

India has put import of tyres under the restricted category, which essentially means original equipment manufacturers (OEMs) will require a licence to continue importing them. Though the restriction is in general for all tyre imports, most tyres imported by either OEMs or for the after-sales market are sourced from China.

The first person mentioned above said most automakers who have applied for a licence either sell premium models in India or have significant exposure to exports, which makes it crucial to import tyres for continuity of operations.

“DGFT is likely to take a decision in the next few days after the automakers submit the applications, and this meeting was organized for automakers to place their views in front of the officials. Most automakers are expecting to get the licences in the coming weeks," said the person seeking anonymity.

Ties between India and China have soured since a deadly clash between soldiers of the two nations left 20 Indian army personnel dead.

Emails queries sent to all the carmakers on Wednesday and to DGFT on Thursday remained unanswered.

German automakers have come together to seek help from Germany’s envoy to resolve the issue of tyre imports. A meeting in this regard took place in June between government officials and the German embassy.

The government decision could force some automakers to suspend manufacturing if they are restricted from importing high-quality pneumatic tyres from China.

Most premium carmakers use a certain quality of pneumatic tyres that are not manufactured in India due to low domestic volume. Such tyres are also used for vehicles exported to other markets.

Luxury passenger vehicle makers have significant quantities of imported content compared to the mass market ones, due to limited volumes of such vehicles in the Indian market. Also, they follow a global sourcing model across the globe and a decision to localize manufacturing of parts depends on opportunities in the domestic market and potential to export, said the second person mentioned above.