The lure of cheap bicycle components has been leading Indian bicycle traders to China, from where they are sourcing material for exports to countries in Africa and the Middle East.
"At least five bicycle and bicycle parts exporters have opened their offices in China and several other merchant exporters have now been contemplating on the same lines," Engineering Exporters Association of India president Rajinder Jindal said.
Since Chinese bicycles are 40 per cent cheaper than those manufactured in India, the traders view it as a source for inexpensive material, which could be used for export purposes, he said.
According to Jindal, the bicycle and bicycle parts exporters who have set up their offices in China are Sadem Industries, Deepak International, Eastman Industries, Unistar Exports and Deol Cycles. Many others are thinking of opening offices in China.
While the shift would hit Indian bicycle component manufacturers, exporters pointed out that the new duty drawback rates back home was one of the reasons why they were forced to look towards China for sourcing components.
"The new duty drawback rates have dealt a severe blow to bicycle exports, causing a fall of more than 50 per cent fall in the bicycle exports between May and June," said Satish Dhanda, convenor (bicycles, bicycle components and accessories panel), Engineering Export Promotion Council.
Industry sources point out that between May 25 and June 9, the total bicycle exports from Ludhiana had fallen from an average of Rs 44.37 crore (Rs 443.7 million) to Rs 15.68 crore (Rs 156.8 million).
"The new drawback rates are so low that they do not even reimburse the incidence of duties. Then how will it be viable for an exporter to continue exporting from here," Dhanda asked.
