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Tyre stocks rise as govt imposes CVD on Chinese tyres
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SME Times News Bureau | 26 Jun, 2019
Stocks of domestic tyre manufacturers rose on Tuesday after the
government imposed a countervailing duty on particular type of tyres
imported from China for a period of five years.
The import CVD is
a country-specific levy that is imposed to offset subsidies given by
foreign governments and to protect domestic industry.
In a
notification, Ministry of Finance's Department of Revenue said it has
imposed import CVD on "new or unused pneumatic radial tyres with or
without tubes and or flap of rubber (including tubeless tyres), having
nominal rim dia (meter) code above 16" (inches) used in buses and
lorries or trucks".
The import CVD which ranges from 9.12 per
cent to 17.57 per cent of the CIF value is in addition to the
anti-dumping duty imposed two years ago.
On Tuesday, the stock
of JK Tyre and Industries rose 4.66 per cent to Rs 79.80 at the BSE.
Similarly, the scrip of CEAT rose 4.30 per cent to Rs 941.60, of Apollo
Tyres rose 0.50 per cent to Rs 200.35 and of MRF by 1.47 per cent to Rs
55,536.80.
"Indian government has imposed a countervailing duty
on Chinese radial tyres which have above 16 inches rim. These tyres are
used in trucks and buses and are already subsidized by the Chinese
government," said Ashwin Patil, Senior Research Analyst, LKP Securities.
"In
the wake of current slowdown in the auto industry, this act from GOI
would bring some cheer to the tyre companies as the replacement markets
would see higher inflow of the tyres coming from the listed or organised
players in India."
Currently, volumes of Chinese tyres have come down from 150,000 per month to 30,000 units per month.
"This
would further go down in the coming months post this decision. Positive
for stocks like MRF, Apollo Tyres and JK Tyres, which have major
presence in the trucks and buses segments," Patil said.
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