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We recently covered a story on Michelin putting a hold on their car tyre supply in India, based on a statement issued by the company. Michelin India has now, however, issued a clarification on the same, stating that the sales of the passenger car tyres remain unaffected.
Here is the official clarification provided by Michelin India:
Owing to the ongoing import restrictions for tyres we have experienced supply shortages recently. For Michelin India, Government of India has recently issued a limited import license, which will also be utilized for importing passenger car tyres to address very high demand for our tyres in a restricted manner for the time being.
Consequently, to streamline our supply chain in the current situation, Michelin India has decided to prioritize selling of these limited stocks only through its priority partners currently, who has equally invested in expanding our distribution footprint in the country.
Michelin is committed to the Indian market and continues to significantly invest in Government of India's 'Make in India' priorities through its Greenfield manufacturing plant for Truck and Bus radial Tyres in Chennai and a state of the art innovation hub in Pune. We continue to work with the Government of India to address this issue and are hopeful of an early resolution.
Here is the original story:
Michelin India has released a statement to its dealer partners announcing the stopping of passenger car tyre supply in the country. The decision has been taken by the company due to the new tyre restriction announced by the Indian Government.
According to the new tyre restriction announced last year, it has now been moved to the restricted commodity. As a result, brands that are importing the tyres to the Indian market need to obtain a special licence from (DGFT) The Directorate General of Foreign Trade.
The company's statement said, "As you may be aware, the recent import restrictions on tyres in India has impacted our passenger car business by constraining supplies and restricting our sales. Due to this uncontrollable situation of license limiting our supplies, we regret to inform you that we will not be able to supply passenger car tyres to you until a further update from the government."
The new rule has been brought into effect by the government to support local tyre manufacturers. Based on the previous rule, the local manufacturer had to pay more taxes due to the high import charges levied on the raw rubber material at around 27 per cent.
On the other hand, the finished tyres products attracted only around 8 per cent. As a result, manufacturing of tyres and pricing it competitively was a lot harder as compared to the current rule. Due to the Covid-19 pandemic and in an ode to boycott Chinese products, who is one among the major countries to export tyres to India, the new rules were drawn up in the country.
As a result, foreign tyre manufacturers such as Michelin have started to suffer from the new import rules. Most import operations of tyres have been temporarily stopped due to the restrictions.
The statement from the company further added, "Our endeavour going ahead is to enrich our dealership through the sales of Michelin two-wheelers and truck & bus tyres from your dealership and we will continue to support you in the best possible way with that. In addition, we're fully committed to providing you with all support services, as we always have."
The company will continue its sales of two-wheeler tyres and heavy-duty tyres for trucks and buses as these are manufactured in India in Tamil Nadu. However, the company has not put a stop to the supply of four-wheeler tyre supply completely.
"Be assured that we look forward to restarting the supply of passenger car tyres to you, as soon as there is an improvement in the current situations and we are confident that we will bounce are higher," said the company concluding its notification to the dealer partners.
Thoughts About The Michelin Car Tyre Supply Stopping Temporarily In India
The new tyres restrictions have forced most manufactures to suspend its export operations of tyres sold in the Indian market. However, the company has a manufacturing facility in Tamil Nadu producing tyres for two-wheelers and heavy-duty four-wheelers. Whether the new rules will force Michelin to start producing car tyres in India, remains to be seen.