Tyre prices on the rise despite dip in input costs

Wednesday, 29 October 2008, 07:00 Hrs
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New Delhi: The sharp depreciation in the value of the Indian rupee and large-scale exports have pushed up prices of tyres in the country, although there has been a decline in input costs, industry experts have said.

The prices of natural rubber have fallen 41.5 percent in six weeks to the year's low of 90 per kg from 142 per kg, even as petrochemical inputs have also declined due to the sharp drop in crude oil price, says an industry lobby for tyre dealers.

But tyre prices across categories have been jacked up by 15-20 percent between March and August, with two leading manufacturers Apollo Tyres and MRF hiking prices by 2 percent last week, said the All India Tyre Dealers' Federation.

"The oligopolistic domestic tyre majors are on the rampage and indiscriminately jacking up tyre prices even when the raw material prices have nose-dived to the bottom," said S.P. Singh, convenor of the representative body.

"The government is once again requested to direct domestic tyre majors to roll back prices at least to March level by 17-22 percent for different categories of tyres," he said in a letter to Finance Minister P. Chidambaram.

The federation said the 25 percent depreciation in the rupee value over the past six-seven months had increased tyre exports by 25 percent but decreased imports by close to 50 percent, which was adding to their woes.

"The tyre import-export imbalance is strangulating the market as domestic tyre makers are collectively refusing to roll back prices," Singh said, adding: around 20 billion were stuck with truckers as credit for purchase of tyres.

The federation has not only sought mandatory price Control to bring discipline into the domestic tyre industry, which was allegedly gagging free market forces, but also a ban on tyre exports for at least a year.
Source: IANS
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