New Delhi
Indian tyre manufacturers are expected to achieve a 7-8% revenue growth in the current fiscal year (FY25), driven by a 3-4% increase in both sales volume and price realisation, according to a report on Monday.
This marks a second consecutive year of single-digit growth, following a compound annual growth rate of 21% between FY21 and FY23. Domestic demand, which constitutes 75% of total sales, will lead this growth, with two-thirds of it coming from the replacement segment and the rest from original equipment manufacturers (OEMs).
Replacement demand, particularly for commercial and passenger vehicles, is projected to boost volumes, while OEM demand is likely to grow by only 1-2% due to sluggish commercial vehicle sales.
Tyre makers are operating at 80% capacity utilisation and are investing ₹5,500 crore in capacity expansion this fiscal. To support local manufacturers, the government has extended the countervailing duty on Chinese radial tyres for another five years. “The industry is gradually increasing tyre prices to offset the rising costs of natural rubber, which makes up about half of the raw materials,” said Naren Kartic.K, Associate Director at Crisil Ratings.
Export growth, however, is expected to be muted at 2-3% due to weak demand in major markets like North America and Europe, which account for 60% of India’s tyre exports. Supply chain disruptions and higher freight costs, triggered by geopolitical issues, have also impacted export prospects.
