Chandigarh: Growing import of cheap bicycle and components from China to India is posing a serious threat to the domestic bicycle industry, says a survey by industry body Assocham.

Besides seeking review of free trade agreements, Assocham sought imposition of anti-dumping duty to curb import of bicycle and its parts.

“There is a need to increase import duty on bicycle and its parts. As by doing this the prices of bicycles made both in India and China would equate in the global market,” said the study titled ‘Future of Indian Bicycle Industry’.

At present, import duty on bicycle parts and components is 20 per cent and is 30 per cent on “fully built” bicycles.

“There is also 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 D S Rawat, secretary general of Assocham.

Rawat said the import of bicycles and components from China to India rose by about 41 per cent during the course of past five years, as such it was imperative for India to review the FTAs and SAFTA to safeguard the interests of the domestic bicycle industry.

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, it said.

“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,” the study said.

However, input cost inflation like rising steel prices (largely due to rising exports of iron ore pellets), 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 USD 1.5 billion Indian bicycle industry produces about 15 million finished bicycles annually.

On behalf of the bicycle manufacturers, the chamber also urged Punjab government to reduce the value added tax (VAT) on bicycle components which is currently hovering 5.5 per cent.

“There is also the need to release VAT refund of bicycle manufacturers lying with the Excise and Taxation Department of Punjab government so that the money be utilised by manufacturers to push production,” said Rawat.

Bicycle manufacturers in Ludhiana, the city accounting for lion’s share of about 90 per cent of bicycle production in India have urged the government to reduce interest rates on loans for SMEs.

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