Indian Tyre Sector Will Grow 7-8% This Year: Report

India’s tyre industry is expected to grow at a steady pace of 7-8% this financial year, according to a report by Crisil Ratings. The domestic tyre industry grew by 9% in FY 25, as per the Automotive Tyre Manufacturers Association (ATMA). The growth during this financial year is expected to be primarily driven by replacement demand. 

The replacement tyre segment, which accounts for 50% of total volume, is projected to grow by 6-7% this year. This growth is being supported by India’s large vehicle base, strong freight movement, and recovery in rural areas. 

In contrast, the original equipment manufacturer (OEM) segment, which represents about 25% of total volume, is expected to see more modest growth of 3-4%. This growth will be supported by steady sales of two-wheelers and tractors and modest increases in passenger vehicle and commercial vehicle sales. 

The research was conducted by Crisil Ratings by taking into account India’s top six tyre manufacturers representing about 85% of the sector’s ₹1 lakh crore revenue. It was found out that domestic demand will remain the driving force behind the industry's performance. Around 75% of total volume comes from the Indian market, with exports accounting for the remaining.

Operating profitability is expected to remain steady at 13-13.5% this financial year which will be supported by stable input costs and healthy capacity utilisation. However, the industry faces margin pressure due to rising raw material costs. 

However, a major concern for the industry is the risk of Chinese tyre manufacturers diverting their products to India due to steep US tariffs that limit China’s access to the American market. This could lead to an influx of low-cost tyres that might pressure domestic prices. 

To address cheap imports, India has imposed anti-dumping and countervailing duties, including a 17.57% levy on large trucks and bus radials from China. However, a broader influx of low-cost tyres across other segments could still impact domestic manufacturers if adequate safeguards are not implemented quickly. 

“India’s tyre sector, grappling with margin pressure, could see price competition intensify if US tariffs push low-cost Chinese products being dumped. Competitive intensity is already capping realisations in the replacement segment, so the risk of prolonged under-recovery of input cost remains high. To counter, manufacturers are likely to maintain capital expenditure (capex) at ~Rs 6,000 crore this fiscal, focused on high-utilisation passenger car radials and two-wheeler capacities, along with automation and backward integration to improve cost efficiency and protect profitability,” noted Poonam Upadhyay, Director, Crisil Ratings.