Indian Tyre Industry Set For 7-8% Growth In FY26

India's tyre manufacturing sector is set for robust expansion in the current financial year, with industry analysts projecting growth rates between 7-8 per cent, news agency PTI reported. This likely growth comes despite subdued demand from original equipment manufacturers, as the replacement market emerges as the primary growth driver.

The sector's export prowess continues to be a significant contributor to overall performance. JK Tyre & Industries Managing Director Anshuman Singhania highlighted that the Indian tyre manufacturing industry maintains its position as an export-focused sector, with overseas shipments exceeding Rs 25,000 crore in FY25.

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"In FY26, the Indian tyre industry is expected to achieve 7-8 per cent growth on the back of the strong domestic replacement demand despite muted OE (original equipment) offtakes," Singhania was quoted as saying during an analyst call.

Investments Drive Manufacturing

The projected growth trajectory is supported by sustained capital investments across the industry. According to Singhania, the expansion is driven by consistent investments in capacity enhancement, manufacturing process improvements, and strengthened research and development capabilities.

Factors That Support Growth Outlook

Market conditions appear favourable for the upcoming period, with multiple positive indicators aligning.

"With the upcoming festive season, coupled with the benefits of the recent repo rate cuts and favourable monsoon conditions, we expect the consumer sentiments to improve further," Singhania said.

Recovery Expected Across Key Segments

Apollo Tyres Chief Financial Officer Gaurav Kumar expressed optimism about demand patterns in the latter part of the fiscal year. The company anticipates improved momentum, particularly from infrastructure and mining sectors following the monsoon season.

"Moving on to the raw material outlook, we expect the raw material cost to be slightly lower in Q2 vis-a-vis the current levels. However, with a bit of uncertainty given on the exchange rates that are currently prevailing," he added.

Segment-Wise Performance Variations Anticipated

Market dynamics are expected to vary across different vehicle categories. Icra Senior Vice President & Co-Group Head (Corporate Ratings) Srikumar Krishnamurthy indicated that OEM demand for commercial and passenger vehicle tyres may lag behind two-wheeler segment growth.

"Replacement demand, which represents the largest pie of the tyre industry, is expected to be supported by factors like favourable rural sentiments, festive demand, and expected rate cut effect on consumption, even as urban demand is soft," he added.

While domestic prospects remain positive, international markets present certain challenges. Krishnamurthy noted that export performance may face obstacles due to ongoing global political tensions and potential policy changes affecting US market access.

Premium Segment Drives Value Enhancement

Industry research indicates that the trend toward premium products is contributing to improved revenue realisations. According to Crisil Ratings analysis, the domestic tyre sector is positioned for revenue expansion of 7-8 per cent this fiscal year, with replacement demand representing approximately half of total annual sales volume.

The ratings agency confirmed that replacement segment growth is expected to continue even as OEM demand remains constrained, with premiumisation trends providing additional support to industry margins.