Indian Economy News

Tyre industry to see 7-8% revenue growth this fiscal year on replacement demand: Report

The Indian tyre industry is projected to achieve a revenue growth of 7-8% this FY26, primarily propelled by robust replacement demand, which constitutes half of the annual sales. While off-take by original equipment manufacturers (OEMs) is anticipated to be subdued, the increasing trend of premiumisation is expected to provide a slight boost to realisations. Operating profitability for the sector is forecast to remain stable at 13-13.5%, supported by consistent input costs and healthy capacity utilisation. This stable outlook, combined with strong accruals, lean balance sheets, and controlled capital spending, is expected to maintain a stable credit profile for the industry. An analysis of India's top six tyre manufacturers, which collectively account for 85% of the sector's Rs. 1,00,000 crore (US$ 11.61 billion) revenue and cater to all vehicle segments, supports these projections.
Domestic demand remains the primary driver, contributing 75% of the total volume, with exports making up the remainder. However, the export momentum faces risks, particularly from escalating trade tensions and the potential for dumping by Chinese producers. The US, which accounted for 17% of India's tyre export volume last fiscal year, has imposed reciprocal tariffs on several Indian goods, potentially eroding price competitiveness. Furthermore, steep US tariffs restricting China's access to that market raise the risk of excess supply being diverted into price-sensitive markets like India. To mitigate cheap imports, India has implemented anti-dumping and countervailing duties, including a 17.57% levy on large trucks and buses from China. However, the report warns that a broader influx of low-cost tyres across other segments could pressure domestic realisations without timely safeguards.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.