Changing face of Indian tyre industry

Changing face of Indian tyre industry

By Rajiv Budhraja*:

“The old order changeth, yielding place to new”
– Alfred Tennyson

Nothing could have better described the state of Tyre Industry in India – the wheels that are powering the growth of the fastest growing nation in the world.

Coincidental it may seem, the last 10 years of Tyre Asia coincide with unprecedented transformation in the Indian Tyre Industry. Not many may have realized this but Tyre Industry in India has just crossed a significant landmark. The last 10 years have been one of the most eventful and productive phases in the rich history of tyre industry in India.

An analysis of tyre production data over the last 10 years shows a steep upward curve. In 2007-08, tyre production numbers stood at nearly 80 million units. The same has increased to nearly 180 million units in FY 2017-18. Virtually, Tyre Industry in India has added 10 million tyres in each of the last 10 years. The journey from 8 to 18 has been accompanied with several bold moves and has been successfully accomplished notwithstanding stiff challenges.

India has emerged as preferred destination for Greenfield and Brownfield investments in the tyre sector. Six out of top 10 global tyre majors have a manufacturing as well as marketing presence in India. At the same time, leading Indian tyre manufacturers have turned multinational with manufacturing facilities outside India.

Till a few years ago, several Indian tyre companies had tie-ups or technological collaborations with international majors for sourcing technologies. As a mark of confidence, today leading Indian companies have their own robust Research & Development (R&D) operations. The sharpening of focus on R&D is unmistakable. According to latest Global Tyre Report, Indian tyre companies rank very high when it comes to percentage increases in R&D spend over previous years. Currently about 2% of the revenue is being invested on R&D which matches fairly with the global average.

Another aspect that has shot into prominence is the exports. Tyre industry has emerged as a major exporter with Indian manufactured tyres being exported to more than 100 countries in the world including the most discerning ones such as US and European countries. Exports of tyres from India are in the range of Rs 10000 crore (US$1.5 billion) per annum (nearly 15% of the industry revenue).

Product quality, R&D

The Indian tyre industry is increasingly converging with the world in terms of practices, product quality and research & development leading to a fillip in demand. Today India has some of the finest radial tyre manufacturing facilities. International vehicle majors (OEMs) have been rolling out vehicles on India-made tyres. All these have a rub-off on tyre exports too. Cost efficiency and customization have also helped in making exports competitive.

In several ways, the tyre industry has come to represent the global face of Indian manufacturing. New state-of-the-art radial tyre manufacturing facilities in India can vie with the best in the world in terms of technology, processes, practices and quality of products. As many as four Indian tyre companies find a pride of place among the top 30 companies in the world.

As they say, the only constant in the automotive space is the change. Several trends are transforming the tyre industry in consonance with changing market dynamics. Topmost among these is the transition to electric mobility about which Government of India has made its stance clear.

Current engine and transmission line up are changing rapidly. Hybridisation and electrification are just a couple of technology paths introduced in the last decade. Tyre manufacturers are gearing up to alter manufacturing mechanisms so as to meet expectations of reducing emissions, light weighting, enhancing fuel efficiency and lower rolling resistance. The role of tyres in overall road safety, fuel efficiency and reducing emissions is being increasingly being recognised.

Vehicles are becoming more computerized and connected. One can monitor tyre inflation pressure through TPMS (Tyre Pressure Monitoring System) in modern-day vehicles. Increasingly vehicles will have on-board display of more information involving tyres’ contribution in overall drive and handling.

Change in the design, weight and rolling resistance of tyres to meet the new-age expectations is leading to a re-look at the raw material portfolio of the industry. Need for higher quality natural rubber has been conveyed to the relevant quarters by the industry. The debate on Carbon Black vs Silica is also raging. Lowering rolling resistance and improving cut and chip resistance are important considerations.

Radialisation drive is receiving a major boost in view of the positive spinoffs such as fuel efficiency and better on-road performance. In case of passenger tyres, radialisation is virtually complete. However, The most noteworthy transformation is visible in the case of Truck & Bus tyres, where radialisation has made a quantum jump from 6% in FY 2008-09 to 44% in FY 2017-18.

An investment of nearly Rs 51000 crore (US$7 billion) has just been completed or is currently lined up in both Greenfield and Brownfield expansion by the industry. In fact, tyre industry stands today as a shining example of Make in India drive launched by the Government. Over the last few years, private investment growth has remained modest in India. Tyre industry stands out for the substantial investments made to support the automobile and economic growth.

Automotive Mission Plan (2016-2026) envisages that the Indian automobile industry will grow 3.5 to 4 times in value during this period. Tyre industry, too, is also projected to increase to a size of over 200000 crore (US$30 billion) from the current turnover of over Rs 55000 crore (US$8 billion).

Tyre industry has come to account for 3% of the country’s manufacturing GDP and currently stands on the cusp of significant growth. The future of mobility is intertwined with the shape that tyre industry will take over the next 10 years.

* Rajiv Budhraja is the Director General of the Automotive Tyre Manufacturers Association (ATMA), India

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