This has also forced domestic bearing makers to slash prices by around 15-20 per cent since July 1997. Earlier, despite a constant downward revision of import duties on finished bearings from 110 per cent plus Rs 280 per piece in 1994 to 25 per cent plus Rs 120 per kg in 1996 imports posed a lesser threat.
This was largely due to the irregular supply pattern of bearings worldwide, production was to cater to specific demand. Also, long delivery lead time and tedious procedures involved in imports, went against the just in time policy of original equipment manufacturer (OEM) players.
Nikesh Shah of N H Securities attributes the current dumping largely to the slowdown in the automobile segment in the global market.
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Also huge stock from the Chinese market, which has no sizeable market of its own, is also another reason.
Also, Japanese suppliers who are facing a domestic slowdown, are targeting the Indian market in a big way.
Imports enjoy a tremendous cost advantage due to the large capacities of international players which allows them to price their product at almost 30-40 per cent lesser than the price of local products.
The situation has been affected further by the slowdown in the domestic automobiles market. Since demand growth will come more from the replacement market, which is price sensitive, domestic players will be constrained to lower prices.
International players score over domestic players in terms of variety. Against the country's requirement of over 10,000 varieties, only around 200 to 250 types are manufactured in large quantities indigenously.
The basis for import duty has shifted from piece based levies to weight based ones.
Thus, players who derive a significant portion of their turnover from small size bearings will suffer more. In the case of SKF Bearings and FAG Precision, small size bearings contribute 38 per cent and 48.56 respectively to their turnover.
Support from their parents in the form of export off-take could provide relief. Others like Anti-Friction Bearings which does not have a foreign collaborator will be hit.