Tyre Industry Set to Grow 7–8% This Fiscal on Strong Replacement Demand: Report

The domestic tyre industry is expected to witness revenue growth of 7-8% this fiscal year, driven by replacement demand that accounts for half of annual sales, according to a report by Crisil Ratings.

The segment is expected to post growth even as offtake by original equipment manufacturers (OEMs) is likely to be subdued, the report stated.

It also noted that the rising premiumisation is expected to give a slight leg-up to realisations.

However, escalating trade tensions and the risk of dumping by Chinese producers diverting inventories because of US tariffs could pose challenges, the report stated

Operating profitability is likely to remain steady at 13-13.5%, supported by stable input costs and healthy capacity utilisation, it said.

This, along with strong accruals, lean balance sheets and calibrated capital spending should help sustain the sector's stable credit outlook, the report stated.

"Our analysis of India's top six tyre makers, catering to all vehicle segments and accounting for 85% of the sector's ₹1 lakh crore revenue, indicates as much," it said.

Domestic demand remains the mainstay, propelling 75% of total volume with exports making up the rest, it added.

The export momentum, however, comes with risks, the report noted.

The US, accounting for 17% of India's tyre export volume last fiscal year, and 4-5% of overall industry volume, has imposed reciprocal tariffs on several Indian goods, potentially eroding price competitiveness, it stated.

And steep US tariffs limit China's access to that market, raising the risk of excess supply being diverted into price-sensitive markets such as India, it added.

To curb cheap imports, India imposes anti-dumping and countervailing duties, including a 17.57% levy, on large truck and bus radials from China.

"However, a broader influx of low-cost tyres across other segments could pressure domestic realisations without timely safeguards," the report added.