Quality and cost competitiveness to enable Indian tyre makers to ride global demand

High levels of automation, the latest manufacturing technologies and the cost-arbitrage advantage set to power the Indian tyre industry in overseas markets and double its share of global trade to 6% by 2030.

By Mayank Dhingra calendar 09 Feb 2023 Views icon3294 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

The Indian tyre industry, which at present registers about 20% of its overall revenues from exports, is likely to see the share of its overseas business grow sharply to 30% by 2030. This enhanced business potential is due to the domestic tyre industry’s much improved and now highly competitive cost structures compared to its global peers.

Even as the global automotive industry rides towards greener mobility solutions and sustainability in manufacturing, Indian tyre makers believe that more than challenges, this transformation offers them immense opportunities to drive future business growth.

“We are fortunate to be in the right place at the right time. We see India growing rapidly in the decade ahead, and the tyre industry is aligned with it,” said Satish Sharma, chairman, Automotive Tyre Manufacturers Association (ATMA), pictured above.

“We believe India has a strong chance of becoming a US$ 8 trillion economy by 2030. The tyre industry, which usually does better than the GDP growth rate by about 2-3%, could attain levels of Rs 160,000 to Rs 200,000 crore by that time, depending upon whether the GDP grows at 6.5% or faster,” he told journalists at a media roundtable at the ATMA annual convention in New Delhi on February 7.

Sharma, who is also Apollo Tyres’ president for Asia-Pacific, Middle-East, and Africa regions, said that a number of factors are likely to contribute to the Indian tyre industry’s accelerated growth. This includes the cost of logistics, which is likely to come down and make Indian tyre manufacturers a lot more competitive compared to their global peers, and in turn enable them to export more out of the country.

Optimising costs

“There is a basic principle in manufacturing that it always flows to the lowest cost centre. With high levels of automation, renaissance with manufacturing, cost arbitrage and the wide talent pool available in the country, we have been able to elevate the quality of our products, which has pushed the Indian tyre industry to become a great manufacturing destination,” Sharma said.

He also pointed out the huge enablement role of regulations – BS VI emission norms – that are structurally driving exports out of India by making Indian vehicles at par with those in key markets around the world. “Our automotive market is maturing very fast and because of the regulations, the tyre technology in India is mirroring what is required in overseas markets. While there are differences, from a basic technology point of view, we are there.

“Given our cost structures on one hand and the technology investments on the other, as well as India’s position in the global scheme of things, we can enhance our addressability of the markets that we serve. If we get our game together, we have a huge opportunity to export Indian tyres. Therefore, we foresee exports growing faster than the domestic in the future,” Sharma said.

“We believe we can be the next claimant in the world market and get a fair share of it. We can increase our share of global trade, which is currently pegged at 3%, to 6% in this decade. While we have doubled it in the last four years, we can do the same over the next five years,” he added.

Commenting on the industry’s R&D levels, Sharma outlined that while it currently invests about 1.2% of its turnover into development, the corpus available in the coming years is set to grow, given the projected growth of the Indian vehicle market.

"We are currently at an inflection point with roadmaps getting laid down, various researches underway and companies experimenting with new technologies,” said Sharma. He added, “

"While the next two  to three years will go in understanding this in detail, the industry is making faster progress in terms of adopting the Scope 1 measures, which focus on converting raw materials to finished products using renewable energy."

According to the ATMA chairman, India can be a potential exporter of tyres to the US and European markets because of its lower cost structures. “Similarly, we can find a good positioning in Africa, where there is no local manufacturing.”

“However, it is difficult for anyone to import into the country because the local manufacturers have got a tight grip on the market. There is no available space in the market for anyone to come and find space. One must offer great quality at the right price,” said Sharma, highlighting the universal mantra that makes businesses the world over shine.

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