AGRA, India (BRAIN)—The bicycle industry of India, which posted double-digit growth rates for the past few years, recently hit hard times as bicycle exports dropped to almost half the number of bikes exported last year, according to a report in Business Standard.
The drop in exports is linked to the jump in steel prices and the falling U.S. dollar, as well as the increasing competitiveness of Chinese bicycles on the world market.
Indian bicycle manufacturers cite the quick rise is Indian steel prices, controlled by a small group of producers, which is pricing them out of the market. The cost of steel to Chinese bike makers is set by their government, giving them an unfair advantage, they claim.
They also point out that the Chinese currency is tied to the dollar which gives Chinese cycle manufacturers an advantage over their Indian counterparts. Given the recent volatility of the currency market, exporters are reluctant to quote dollar prices knowing they could take big hit if the dollar continues to fall.