Domestic Tyre Industry To Grow by 7–8% in FY26, Forecasts Crisil

New Delhi, July 18 – According to a report published by Crisil Ratings, India’s tyre industry is expected to achieve revenue growth of 7-8% in FY26, primarily driven by strong replacement demand that accounts for almost 50% of the industry’s annual sales.

Even with rising raw material costs, particularly for natural rubber, and potential challenges in the export market, market conditions are still expected to favour strong industry growth.

Additionally, as the industry expands, manufacturers will need to focus on cost optimization, technology adoption, and sustainable practices to navigate this evolving landscape.

Growth Amid OEM Slowdown

Despite an expected slowdown in demand from original equipment manufacturers (OEMs), the sector is forecasted to sustain its growth trajectory. The report highlighted that rising premiumization trends are also likely to boost realization per unit, helping offset subdued OEM demand.

Profit Margins and Credit Outlook Remain Stable

Operating profitability is anticipated to remain steady at 13–13.5%, supported by stable input costs and healthy capacity utilization. The sector’s credit outlook remains strong, supported by robust internal accruals, lean balance sheets, and disciplined capital expenditure.

Crisil’s analysis is based on India’s top six tyre manufacturers, which span all vehicle categories and together contribute to 85% of the industry’s ₹1 lakh crore revenue base.

Domestic Market is the Backbone

The domestic market remains critical, accounting for 75% of total volumes. However, exports also form a significant part, although the report cautions that international trade dynamics could introduce volatility.

Export Risks from U.S. Tariffs and Chinese Oversupply

Last fiscal year, the U.S. represented 17% of India’s tyre export volume and 4-5% of the global sector volume. The U.S. has imposed reciprocal tariffs on several Indian products, which could potentially impact the price competitiveness of Indian tyre exports to the U.S. market.

Furthermore, U.S. tariffs on Chinese tyres have curtailed Chinese access to the American market, possibly diverting tyre inventories towards price-sensitive countries like India, raising concerns about the potential for dumping that may impact domestic prices.

Safeguards Against Cheap Imports

India currently imposes anti-dumping and countervailing duties, including a 17.57% levy on large truck and bus radial tires from China, to protect the local industry. However, the report warns that a broader influx of low-cost tyres in other categories could suppress domestic margins unless preventive measures are expanded promptly.

The sector’s overall growth outlook remains positive. Still, its performance will depend on the resilience of domestic consumption, the stability of input costs, and policy measures to safeguard against unfair competition.

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