The Indian tyre industry is expected to grow by 7-9% over the next five year on the strength of a positive outlook for the Indian automobile industry. The domestic automobile industry is expected to become the third largest by 2021 as per rating agency ICRA forecast.
The domestic tyre industry benefited from strong growth in both original equipment (OE) and replacement segments in the ongoing fiscal, noted agency in its report.
While Replacement tyre demand from truck and bus segment recovered sharply in the last one year supported by post-effects of goods and service tax (GST), pick-up in infrastructure activities and healthy consumption driven demand.
Tyre exports have been steadily increasing in the last one year with recovery in tyre demand from overseas markets and rising competitiveness of Indian tyre makers, both in terms of quality and pricing, ICRA stated.
The tyre industry witnessed large capacity additions in the last decade with a cumulative spend of around INR 27,800 crore with about 70% spent in the last six years. The industry (including component manufacturing) is expected to grow at a compounded annual growth rate of 5.9 per cent and reach $251.4-282.8 billion by 2026, thereby becoming the fastest growing industry in the country, as per the report.