Friday, March 14, 2014

Imports of Chinese bicycles bleeding domestic industry: ASSOCHAM


Rising imports of bicycles and their components from China to India at almost 25 per cent cost-comparative advantage owing to free trade agreements (FTAs) together with South Asia Free Trade Agreement (SAFTA) are posing a serious threat to domestic bicycle industry producing over 41, 000 bicycles per day, according to a just concluded study undertaken by the ASSOCHAM Economic Research Bureau.
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“There is a need to increase the import duty on bicycles and its parts from the  prevailing 20 to 30 per cent as by doing this the prices of bicycles made both in India and China would equate in the global market,” noted a just-concluded study on ‘Future of Indian Bicycle Industry,’ conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

“There is an urgent need to impose strict anti-dumping laws to check rising cheap imports of bicycles and components from China which has been dumping its products into India,” said Mr. D. S. Rawat, Secretary General of ASSOCHAM, while releasing the findings of the study.

“The imports of bicycles and their components from China to India have risen by about 41 per cent during the course of the past five years, as such it is imperative for India to review the FTAs and SAFTA to safeguard the interests of the domestic bicycle industry,” he added.

India’s exports of bicycle to other countries have grown at a compounded annual growth rate (CAGR) of about 17 per cent while the imports grew at over double the rate of about 35 per cent mainly on account of uncompetitive pricing, noted the study.

China has ranked on top amid countries importing bicycles and their components into India with imports worth about $8, 900 in 2007 to $35, 000 in 2012.

“Soaring fuel prices, rising rural incomes, growing health consciousness together with free distribution of bicycles to students by various State Governments in order to promote education and keep a check on dropout rates will push the growth of bicycle industry in India and the industry is expected to generate about one million jobs during the course of next couple of years or so,” highlighted the study.

However, input cost inflation like rising steel prices (largely due to rising exports of iron ore pellets) and poor condition of roads especially in rural areas are other significant challenges faced by the industry, it added.

India is world’s second largest bicycle producer after China accounting for about 10 per cent of global bicycle production and with an estimated market size worth $1.5 billion Indian bicycle industry produces about 15 million finished bicycles annually.

It may be noted here that ASSOCHAM has batted for reduction in excise duty imposed on bicycles to support the industry and reduce the excess burden.

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