India’s leading tyre makers are preparing a fresh round of capital expenditure for FY27 and the years ahead, as capacity utilisation across key product categories moves close to peak levels and demand remains steady across replacement and original equipment channels.
Apollo Tyres, CEAT, JK Tyre & Industries and Balkrishna Industries have together outlined large capex plans covering truck and bus radial tyres, passenger car tyres, off-highway tyres, carbon black, upstream facilities, automation and sustainability-linked investments.
The capacity push comes at a difficult time for the sector. Tyre companies are facing a sharp rise in raw material, crude-linked input, freight and energy costs because of geopolitical tensions in West Asia. Companies have already started taking price increases, but pass-through to customers is expected to happen with a lag, particularly in the OEM channel.
Still, the investment cycle is not slowing materially. The reason is simple: factories are running full or close to full, demand has remained supportive, and tyre makers do not want to lose growth opportunities in replacement, OEM, export and premium product categories.
Apollo Tyres has outlined a capex of ₹3,500 crore for FY27, with nearly 80 percent of the amount earmarked for growth and capacity expansion projects. The company said capacity utilisation was at a high of 90 percent across its India and Europe operations.
“Overall, given the healthy demand outlook, we expect full capacity utilisation and therefore will continue to progress on our planned expansion initiatives,” Gaurav Kumar, Chief Financial Officer, Apollo Tyres, said during the company’s Q4 FY26 earnings call.
Kumar said close to ₹3,000 crore of Apollo’s FY27 capex will be in India, where the company is expanding capacity in truck and car tyres. The balance will be deployed in Europe, where the company is expanding passenger car tyre capacity at its Hungary plant.
Apollo’s expansion plan comes even as the company expects raw material costs to rise in high teens sequentially. It has already announced price increases of 6-8 per cent for the current quarter and has indicated that further hikes will be needed.
“Demand remains strong across categories and channels, with April showing equally strong volume growth, and we expect the same momentum to continue through Q1,” Kumar said. At the same time, he said geopolitical developments in West Asia have added “significant volatility” to raw material, energy and logistics costs, which will impact margins in the near term.
CEAT is also preparing higher spending in FY27, although the company has said it will calibrate capex depending on how the cost and demand environment evolves.
CEAT Managing Director and Chief Executive Officer Arnab Banerjee said the company’s capacity utilisation is currently in the 85-90 per cent range across categories. For FY27, the company expects growth and normal capex of about ₹1,300 crore to ₹1,400 crore. It is also setting aside additional capital for the CAMSO business, particularly upstream facilities such as mixers and calenders.
CEAT’s capex plan follows a strong FY26, when the company’s standalone revenue crossed ₹15,000 crore for the first time. However, the company has flagged near-term demand moderation because of cost pressure.
“As of now, as we enter FY27, demand looks good in aftermarket, in OEMs, but there is also an attendant steep raw material price hike,” Banerjee said. “Overall demand outlook is expected to moderate out, but broadly may remain supportive.”
CEAT expects raw material prices to rise more than 15 per cent in Q1 and move closer to 20 per cent by the end of the quarter. The company has already taken price increases in the replacement market and plans further hikes.
JK Tyre has announced one of the largest expansion plans in its history. The company’s board has approved brownfield expansions for passenger car radial and truck bus radial tyres at an aggregate cost of ₹4,980 crore, to be implemented in phases until 2029. This is in addition to ₹1,130 crore of expansion projects that are already under implementation.
Together, JK Tyre’s planned expansions amount to ₹6,110 crore and are expected to increase TBR and PCR capacities by 24 percent.
Sanjeev Aggarwal, Chief Financial Officer, JK Tyre, said the company had announced the earlier ₹1,130 crore expansion plan because it was running at almost full capacity utilisation. The additional ₹5,000 crore expansion will be completed in three phases over the next three to four years, he said.
“Total cash outlay on yearly basis would be roughly around ₹1,200 crore and this will not put any dent on the cash availability with the company, which is going to be even much more stronger,” Aggarwal said. He added that while the company will take debt for the expansion, it expects the debt to be supported by higher EBITDA generation over the next three to four years.
JK Tyre has also maintained a positive demand view for FY27.
“The demand in the tyre industry is expected to remain buoyant for FY27 on the back of healthy growth in both the replacement and OE markets,” Managing Director Anshuman Singhania said during the company’s Q4 FY26 earnings call.. “We have not seen any order books getting cut from any of the OEM, be CVs, passenger or any other line.”
However, he added that geopolitical uncertainty has created some uncertainty in the market and disrupted supply chains, even as underlying structural demand remains intact.
Balkrishna Industries, or BKT, is also stepping up investment as it expands beyond its traditional off-highway tyre strength into on-highway segments.
The company’s board has approved an additional capex of ₹2,000 crore for capacity expansion and infrastructure development across OHT and on-highway tyre categories, AI-enabled automation and sustainability initiatives. The investment will support the company’s carbon black expansion, commercial vehicle radial tyre project, passenger car radial tyre project and broader on-highway ambitions.
BKT has already completed a new carbon black line at Bhuj, taking capacity to 265,000 tonnes per annum, and increased captive power plant capacity at Bhuj from 40 MW to 64 MW. The company is now working on completing the balance carbon black project, which will raise total capacity to 360,000 tonnes per annum.
It has also completed Phase 1 of the commercial vehicle radial tyre project with a capex of ₹750 crore, adding fungible capacity of 800 tyres per day for CVR and OHT. Phase 2 of the CV radial project and the passenger car radial tyre project are scheduled to launch in FY27.
Rajiv Poddar, Joint Managing Director, Balkrishna Industries, said for FY27 the company expects capex of ₹1,500 crore to ₹1,800 crore. The company’s overall capex plan till FY29 is about ₹6,800 crore, of which around ₹3,000 crore has already been spent, leaving about ₹3,800 crore for the remaining years.
BKT’s expansion also marks a strategic shift. The company has entered the truck bus radial segment and relaunched two-wheeler tyres. It also plans to introduce passenger car radial tyres by the end of the current calendar year.
The capex plans across tyre makers come against the backdrop of a strong year for the Indian automobile industry. According to the Society of Indian Automobile Manufacturers, FY26 saw the highest-ever sales across passenger vehicles, commercial vehicles, three-wheelers and two-wheelers after seven years. Passenger vehicle sales stood at 46.43 lakh units, commercial vehicles at 10.80 lakh units and two-wheelers at 2.17 crore units in FY26.
That momentum has supported both OEM and replacement demand for tyres. The replacement market is also benefiting from an ageing vehicle parc, higher usage, infrastructure-led movement of goods and rural demand.
Exports are another factor behind the investment cycle. According to government data, India’s tyre exports touched a record ₹27,312 crore in FY26, growing 9 per cent over the previous year despite supply chain disruptions, elevated logistics costs and trade uncertainty. The US remained the largest export destination, while Germany, Italy, Brazil and France also remained key markets.
The Automotive Tyre Manufacturers Association has also said that tyre manufacturers have invested heavily in greenfield and brownfield projects in recent years, supported by demand, exports, manufacturing competitiveness and product development.
However, cost pressure remains the biggest near-term risk. Tyre manufacturing is heavily exposed to crude-linked inputs such as synthetic rubber, carbon black and processing oils. Natural rubber prices, freight rates and currency movement also affect margins.
The industry is therefore entering FY27 with a two-sided challenge. On one side, companies need to invest because capacity is tight and demand remains firm. On the other, higher input costs and price hikes could test demand elasticity and margins in the near term.