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The Indian bearing industry is estimated at Rs30bn. The Industry has established a highlydiversified product range of around 1000 types of bearings, having high volume demand. Thedomestic industry caters to almost 70% of total demand for common varieties and sizes ofbearings. The remaining demand to the tune of 30% is being imported, essentially for industrialapplications and special purpose.

Bearing Industry in India can be divided into three segments the organized sector, unorganizedsector 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 industrystructure of bearing industry.

Organized Sector

The organized sector comprises of 12 leading manufacturers who contribute to over 55% of thetotal turnover. The total investment in the organized sector is about Rs17bn with an annualinstalled capacity of 234mn bearings and employs more than 14000 people. Most of the bigplayers are having either technical or financial collaboration with leading auto manufacturers.

International collaboration gives access to best technology in the world. Exhibit 2 represents thestrong domestic presence and international collaboration of few big domestic players.

Huge Unorganized Sector

The unorganized sector includes the small-scale manufacturers and manufacturers of spuriousbearings. The unorganized sector contributes to almost 15% of total industry turnover. Theunorganized sector players have a strong regional presence and mainly cater to the needs of thereplacement market.

Imports

30% of total demand for bearing industry is met by imports. While a part of the imports comethrough official channels, there is also a huge volume of illegal imports. Legal Imports generallyrepresent the specialized bearings not manufactured in India. There are a large variants ofimported bearings, each holding a small market share in India. Though, the quality of bearingsmanufactured by large players in India is comparable to world standards, domestic manufactureis not viable due to the small size of the market segment. It becomes uneconomical tomanufacture such type of bearings as it includes huge capital expenditure.

Illegal imports generally represent the entry of spurious imports of bearings. In the past, theIndian 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 ofimports was the order of the day, accounting for a high 45-50% of total imports. While duty rateshave come down over the last few years, a few countries like China, Russia, Eastern Europedump their excess production at a very low rate. This leads to a huge price differential betweendomestic and imported bearings (almost 40-50%), encouraging imports. Exhibit3 shows thecurrent duty structure on bearings.

Exhibit: Present Duty Structure

Category Rate of DutyBall bearings 30%

Tapered roller bearings,including cone and taperedroller assemblies

30%

Spherical roller bearings 30%Needle roller bearings 30%

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Engineering sector, which accounts for 28% of total share, holds the second growth driver.Considering the high reliance of bearing industry on automobile sector, the fate of bearingindustry is largely dependent on production of vehicles. The demand of bearing is also linked toheavy-duty industrial application in roll ing stock, rolling mills, heavy earth moving equipmentsand other heavy machinery, accounting for 21% of total bearing market. However demand in thelatter category is met through imports and theref