abhishreshthaa
Abhijeet S
The Indian bearing industry is estimated at Rs30bn. The Industry has established a highly diversified product range of around 1000 types of bearings, having high volume demand.
The domestic industry caters to almost 70% of total demand for common varieties and sizes of bearings. The remaining demand to the tune of 30% is being imported, essentially for industrial applications and special purpose.
Bearing Industry in India can be divided into three segments – the organized sector, unorganized sector and imports. The organized sector primarily caters to the OEM segment, which are predominantly automotive, railways and other industrial users.
The replacement, market is dominated by unorganized sector. Exhibit1 shows the industry structure of bearing industry.
Organized Sector
The organized sector comprises of 12 leading manufacturers who contribute to over 55% of the total turnover. The total investment in the organized sector is about Rs17bn with an annual installed capacity of 234mn bearings and employs more than 14000 people.
Most of the big players are having either technical or financial collaboration with leading auto manufacturers. International collaboration gives access to best technology in the world. Exhibit 2 represents the strong domestic presence and international collaboration of few big domestic players.
Huge Unorganized Sector
The unorganized sector includes the small-scale manufacturers and manufacturers of spurious bearings. The unorganized sector contributes to almost 15% of total industry turnover.
The unorganized sector players have a strong regional presence and mainly cater to the needs of the replacement market.
Imports
30% of total demand for bearing industry is met by imports. While a part of the imports come through official channels, there is also a huge volume of illegal imports. Legal Imports generally represent the specialized bearings not manufactured in India. There are a large variants of imported bearings, each holding a small market share in India.
Though, the quality of bearings manufactured by large players in India is comparable to world standards, domestic manufacture is not viable due to the small size of the market segment. It becomes uneconomical to manufacture such type of bearings as it includes huge capital expenditure.
Illegal imports generally represent the entry of spurious imports of bearings. In the past, the Indian bearings industry was highly protected on account of very high import duties ranging from 150% to 240% ad valorem. As a result, an illegal import via smuggling and under invoicing of imports was the order of the day, accounting for a high 45-50% of total imports.
While duty rates have come down over the last few years, a few countries like China, Russia, Eastern Europe dump their excess production at a very low rate. This leads to a huge price differential between domestic and imported bearings (almost 40-50%), encouraging imports. Exhibit3 shows the current duty structure on bearings.
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