India’s Tyre Industry Set for 7-8% Revenue Rise in FY26: Report

India’s tyre sector is expected to register a steady 7–8% revenue growth in the current financial year, driven largely by replacement demand, which contributes nearly 50% of the industry’s annual sales, according to a report released by CRISIL Ratings on Friday.

While demand from Original Equipment Manufacturers (OEMs) is projected to remain muted and exports stable, a trend of rising premiumisation is likely to marginally boost average realisations across the sector. However, the report also flags emerging risks from global trade tensions, particularly the possibility of dumping by Chinese manufacturers, who may reroute inventories to India in response to tariff barriers in the U.S.

Despite these external headwinds, the report notes that the industry’s operating profitability is expected to remain in the 13.0–13.5% range, aided by stable input costs, healthy capacity utilisation, and disciplined capital spending. Strong cash flows and lean balance sheets will help the sector maintain a stable credit outlook, CRISIL said.

The findings are based on an analysis of India’s top six tyre manufacturers, which collectively account for about 85% of the sector’s revenue, estimated at around Rs 1 lakh crore.

Domestic demand continues to anchor industry growth, contributing roughly 75% of total volumes, while exports make up the rest. However, the export landscape is becoming more challenging, with the U.S.—a key export destination accounting for 17% of tyre exports last fiscal—imposing reciprocal tariffs on several Indian goods. These tariffs could dent the price competitiveness of Indian tyres in that market.

Moreover, China’s restricted access to the U.S. market due to steep tariffs has raised concerns that its excess production could flood price-sensitive markets like India, potentially affecting domestic pricing and margins. Though India has imposed anti-dumping and countervailing duties on certain tyre imports—such as a 17.57% duty on large truck and bus radials from China—the report cautions that broader influx across segments may hurt local manufacturers unless additional safeguards are implemented.

The replacement segment, a cornerstone of industry sales, also faces intensifying competition, which is expected to keep profit margins range-bound.

Additionally, the sector remains vulnerable to raw material costs and forex volatility, with nearly half of the raw materials being imported. In FY25, natural rubber prices rose 8–10% due to supply disruptions, while prices of crude-linked inputs like synthetic rubber and carbon black jumped 10–12%. This surge in input costs led to a 300 basis point decline in margins, given the limited ability to pass on costs in both the OEM and replacement markets.

Despite these challenges, the CRISIL report paints a cautiously optimistic picture, projecting steady revenue growth, resilient profitability, and sustained credit strength—driven by the industry's strategic focus on domestic demand and controlled capital allocation.

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