JK Tyre to enter two-wheeler tyre market through trading route

India' third-largest tyre manufacturer JK Tyre is planning to enter the two-wheeler tyre market through the trading route instead of setting up a manufacturing plant amidst the slowing auto market. Raghupati Singhania, CMD of JK Tyre said, "We are planning to outsource and sell two-wheeler tyres for the time being. We are working on signing up with vendors and we are exploring both local and international vendors. We will service both the aftermarket and OEM (original equipment manufacturer) segment."

The company's portfolio currently includes tyres for four-wheelers, buses and trucks. The main competition in two-wheeler category are MRF, CEAT and TVS. In the bearish auto industry, JK Tyre is cutting back from investing heavily into in-house manufacturing solutions. "We have to be more careful in making any fresh investment. As of now, no fresh announcements have been made. Therefore, going forward, we will have to wait and watch how the markets grow, then we will think of investment," Singhania said.

As per the records of Society of Indian Automobile Manufacturers, the Indian two-wheeler sales are growing every year since 2009-10 and have crossed 16 million figure in 2014-15. On the other hand, the passenger car sales have not gone above 2.66 million mark since 2012-13 while the sales of commercial vehicle dropped to 6,14,961 units from 8,09,499 vehicles in 2011-12.

Due to the free-trade agreement with South Asian countries, only 6-7 per cent import duty is levied on tyres while natural rubber attracts 25 per cent duty. Therefore, importing tyres instead of raw rubber makes more sense from business point of view.

Presently, over 80 per cent of the tyres imported into the country for replacement market come from China and most of those tyres do not comply with the standards set by Bureau of Indian Standards.