Punjab cycle makers face export downturn

Absence of export incentives the main reason

In the absence of export incentives, Punjab's cycle industry is diversifying into manufacturing auto components. During the past few months, exports have declined because of the fluctuating raw material market.

In spite of the increased steel prices, cycle exports had declined from Rs 850 crore to Rs 800 crore this year, in comparison to last year, said Varinder Kapoor, general secretary of United Cycle and Parts Manufacturers.

Bhupinder Pahwa of Parker Cycle Industries said reduced incentives were causing a decline in exports from the state, resulting in the diversification into auto components manufacturing. On the other hand, the increased competition from China was forcing the industry to look for other options, he added.

There are about 3,500 cycle-manufacturing units in the state and more than 40 per cent of the units have moved to manufacturing of auto components, he says.

Elaborating further, Kapoor said the cycle industry was virtually on the verge of closure, the main reasons for which was the new foreign trade policy.

It had been observed from the total turnover of the cycle industry, the contribution of export was 40 per cent, and in the absence of incentives, it was difficult to survive because the demand was not very good, given the tough competition, he added.

The major players had also cut production by almost 50 per cent because of labour unrest, said Kapoor. As the auto sector was growing, the demand for auto parts would also grow apace, considering the fact that they needed to be changed from time to time, he said, adding that further increased opportunities for the industry.

About 25 per cent of the units had become sick, and if the government did not take serious action to revive exports, the industry would shift to other states to take tax benefits and work in the peaceful environment, commented Pahwa.