India's Tyre Sector: Navigating Growth Amid Trade Uncertainties
India's tyre industry anticipates a 7-8% revenue growth this fiscal, largely driven by replacement demand. However, trade tensions, potential dumping by China, and rising raw material costs pose challenges. Despite these, stable input costs and strategic investments aim to sustain profitability and sector stability.
- Country:
- India
The Indian tyre industry is projected to witness a steady revenue growth of 7-8% this fiscal year, primarily fueled by robust replacement demand, according to a report by Crisil Ratings. Although original equipment manufacturer (OEM) demand is expected to remain subdued, exports are anticipated to hold steady.
The report underlines that the sector will face challenges from escalating trade tensions and the risk of Chinese producers diverting inventory towards India due to US tariffs. This situation could pressure domestic realisations, despite a slight uptick in revenue expected from rising premiumisation.
Operating profitability is anticipated to stay at 13-13.5%, bolstered by stable input costs. Domestic demand will continue to dominate, fueling 75% of total volume, as export expansion is supported by demand from regions like Europe and Latin America. However, new US tariffs on Indian goods and potential import surges could threaten India's price competitiveness.
India's anti-dumping measures aim to curb cheap imports, with specific levies on Chinese products. Nonetheless, the influx of low-cost tyres from other segments may pressure realisations further. Meanwhile, the sector plans capital spending of about Rs 6,000 crore, focusing on passenger car and two-wheeler segments to enhance efficiency and profitability.
(With inputs from agencies.)
Google News