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At least a cycle for every Indian. Hero offers a 2k model

Last updated on: June 15, 2018 10:41 IST

The wheels turn for bicycles, as manufacturers go back to the basics.

After motorised two-wheelers overtook cycle sales in the country, manufacturers are focusing on commuter segment again and reviving entry-level cycles.

Boys are silhouetted against the setting sun as they ride bicycles on the outskirts of Agartala, Tripura. Photograph: Jayanta Dey/Reuters

The cycle is still the most common and faithful mode of transport all over India. Picture: Agartala, Tripura. Photograph: Jayanta Dey/Reuters.

These numbers are surprising: India, the world's second largest cycling nation after China, sells more bikes than bicycles.

A man carries schoolchildren on his bicycle in Srinagar, Kashmir. Photograph: Danish Ismail/Reuters.

Srinagar, Kashmir. Photograph: Danish Ismail/Reuters.

The demand for motorised two-wheelers in the country is expanding, but cycle sales are shrinking, and the gap between the two is only growing wider.

On a railway platform on a foggy winter morning in Chandigarh. Photograph: Ajay Verma/Reuters.

Chandigarh. Photograph: Ajay Verma/Reuters.

Against a record demand of 20 million bikes in 2017, cycle sales have stagnanted at 15-16 million in the last few years.

Bharatiya Janata Party rides past the party's headquarters in New Delhi. Photograph: Anindito Mukherjee/Reuters.

New Delhi. Photograph: Anindito Mukherjee/Reuters.
 

This status of the cycle industry is puzzling when sales of other personal mobility products like motorcycles, scooters and cars continue to grow.

Cycling near India Gate, New Delhi. Photograph: Adnan Abidi/Reuters.

India Gate, New Delhi. Photograph: Adnan Abidi/Reuters.

The country’s penchant for motorised bikes has something do with the way the cycle industry has evolved over the past few years.

The monsonn, a bicycle and Kochi, Kerala. Photograph: Sivaram V/Reuters.

Kochi, Kerala. Photograph: Sivaram V/Reuters.

Having struggled to grow the entry segment products in recent years, cycle manufacturers shifted focus to premium products such as fancy sports cycles that are for leisure riders and cycles for women and children, which all form part of the non-commuter segment. And while this segment is growing, the commuter segment is falling behind.

Soldiers patrol the fenced border with Bangladesh in Fasidaya village on the outskirts of Siliguri, West Bengal. Photograph: Rupak De Chowdhuri/Reuters.

India-Bangladesh border, Fasidaya village on the outskirts of Siliguri, West Bengal. Photograph: Rupak De Chowdhuri/Reuters.

The share of commuter cycles, which are used in semi-urban and rural areas, has shrunk from 60-65 per cent a few years ago to 50 per cent now.

Old quarters of Delhi. Photograph: Adnan Abidi/Reuters.

Old Delhi. Photograph: Adnan Abidi/Reuters.

Pankaj Munjal, chairman of the country’s biggest cycle company Hero, admits that it was a mistake to put the commuter segment on the back burner.

Braving the weather in Srinagar, Kashmir, Photograph: Danish Ismail/Reuters.

Srinagar, Kashmir. Photograph: Danish Ismail/Reuters.

“We somehow saw that the commuter market is declining and we made investments in upper end of the segment. We really ignored this mass segment and it was a mistake. We are fixing it.”

The toy seller, New Delhi. Photograph: Fayaz Kabli/Reuters.

New Delhi. Photograph: Fayaz Kabli/Reuters.

The market leader, which sells every third cycle in the country, is getting ready to energise the commuter segment. A chunk of buyers of cycles in this segment have moved to motorcycles in recent years with availability of easy loans.

A woman being transported to the hospital at Lalgarh, West Midnapore district, some 170 km west of Kolkata. Photograph: Jayanta Shaw/Reuters.

Lalgarh, West Midnapore district, some 170 km west of Kolkata. Photograph: Jayanta Shaw/Reuters.

Says Munjal: “The commuter, who could afford a cycle, has moved up to motorcycle as he gets finance. He can travel longer. The poor in those markets still cannot afford a cycle.”.

Surviving a cyclone, West Bengal. Photograph: Rupak De Chowdhuri/Reuters.

Siliguri, West Bengal. Photograph: Rupak De Chowdhuri/Reuters.

The price tag of Rs 3,000 for a commuter cycle is not affordable to millions in villages who are estimated to walk up to six kilometres every day for work. The industry estimates the size of these potential buyers at 320 million.

Man and his dog and his cycle, Mumbai. Photograph: Danish Siddiqui/Reuters.

Mumbai. Photograph: Danish Siddiqui/Reuters.

In less than a month, Hero Cycles will launch its new commuter cycle that seeks to break the affordability barrier. The new cycle, developed using alternate materials, will be priced at Rs 1,999. “We had never thought of it. A new world will open up for us at that price point,” he adds.

Straw being transported in Agartala, Tripura. Photograph: Jayanta Dey/Reuters.

Agartala, Tripura. Photograph: Jayanta Dey/Reuters.

Hero will not make money on this cycle but Munjal says the company’s cost structure will improve with an estimated additional production of 5,000 units every day. “India makes about 15 million bicycles a year. Because the local market is not big enough, we are also not very strong on exports. We will turn export competitive.”

A schoolgirl rides home in Chandigarh. Photograph: Ajay Verma/Reuters.

Chandigarh. Photograph: Ajay Verma/Reuters.

In his drive to make cycles affordable to all, Munjal is being mentored by ex-Maruti boss Jagdish Khattar. Khattar, who spent several years trying to put Indians behind the wheels, now has a new goal in sight.

Mustard fields near Srinagar, Kashmir. Photograph: Danish Ismail/Reuters.

Srinagar, Kashmir. Photograph: Danish Ismail/Reuters.

He believes that people who cannot be put on motorised vehicles should be put on cycles. “Two-wheelers are not a dream for the bulk of rural India...two wheels are... If we had not ignored the mobility needs of these 32 million people the face of rural area would have been different today,” says Khattar, who retired as the managing director of country’s biggest car maker Maruti Suzuki in 2007.

Pedal Power
  • India's cycle industry is worth Rs 65 billion
  • 15-16 million units are sold annually
  • Demand for cycles in entry segment  is falling
  • 320 million Indians walk up to six km for work every day because they cannot afford a cycle
  • 46 per cent in villages have cycles
  • Cycle ownership has declined 30 per cent

A handy perch for an alley cat in the old quarters of Delhi. Photograph: Mansi Thapliyal/Reuters.

Old Delhi. Photograph: Mansi Thapliyal/Reuters.

He is surprised that the cycle industry concluded that India does not have a demand for entry-level products.

“The government should look at lowering GST for cycles priced below Rs 3,000 from the current 12 per cent like it moderated taxes for shoes and apparels that are priced lower,” states Khattar, who is actively working with departments in the government including Niti Aayog to put cycles on the fast track.

A duststorm on the banks of the Ganga, Allahabad, Uttar Pradesh. Photograph: Jitendra Prakash/Reuters.

On the banks of the Ganga, Allahabad, Uttar Pradesh. Photograph: Jitendra Prakash/Reuters.

For cycles, though, becoming the preferred mode of mobility in cities is a long way off. The city roads are evidently hostile to cycles and there is negligible infrastructure to encourage their use.

No wonder, then, there are only sixty cycles in the country per thousand households. To put it in perspective, in the Netherlands, the ratio is 1,040 cycles per thousand households.

Still riding using a cycle during a flood at Maner, Patna district, Bihar. Photograph: Krishna Murari Kishan/Reuters.

Maner, Patna district, Bihar. Photograph: Krishna Murari Kishan/Reuters.

Besides blaming the taxes and the lack of infrastructure support, the industry highlights the lack of finance option for cycle buyers.

“Banks and NBFCs have not looked at this sector in a good way. Banks claim they will need to do the same documentation for a car or a bike. The effort is same but returns are less. If that gets addressed, the commuter cycle will flourish,” says Munjal.

A farmer carries plastic pipes used for watering fields on his bicycle in Tonk, Rajasthan. Photograph: Danish Siddiqui/Reuters.

Tonk, Rajasthan. Photograph: Danish Siddiqui/Reuters.

For the banks, cycle loans aren’t a profitable proposition. Ramesh Iyer, vice-chairman and managing director at leading rural NBFC Mahindra Finance, says: “Micro finance companies may be better placed to address such a demand. If volumes justify at a particular location, one can still look at it. The collection cost for a monthly EMI of Rs 300-Rs 400, considering a cycle price, is very high if one has to physically collect the amount every month,” says Iyer.

A bicycle hangs from the window of a train at Parsha Bazar railway station, Patna, Bihar. Photograph: Navesh Chitrakar/Reuters.

Parsha Bazar railway station, Patna, Bihar. Photograph: Navesh Chitrakar/Reuters.

He is hopeful that this challenge may be addressed when digital banking reaches the masses and there is technology intervention in repayment of such small loans.

Until that happens, cycle rides for many are nothing more than a distant dream.

Ajay Modi in New Delhi
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