Rating agency ICRA has predicted a favorable outlook for the Indian tyre industry in FY 2022. A growth of 13-15pc is expected in the original equipment manufacturing (OEM) segment and 7-8pc in replacement demand, forecasts the agency.
Other factors which will support the growth are improved rates of vaccination, normal monsoons aiding the rural economy among others. A lower base due to the COVID-19 pandemic in FY2021 will also lead to this growth.
The ICRA report states that tyre demand is more resilient than other auto components, mainly supported by replacements. Although with a fall in auto demand, tyre demand also declined, its recovery was faster starting Q2 FY202, even reaching pre-pandemic levels. In FY2022-2025, the domestic demand is expected to increase at a Compound Annual Growth Rate (CAGR) of 7-9pc aided by continued replacement demand, consumption in the OEM sector, and exports.
The report states, in FY 2021, there was a 10pc growth in the value of tyres exported and 8pc growth in the volume. In FY 2021, there was a marginal contraction. US and European nations topped the charts as major destinations, especially in their agri-construction segments.
The tyre industry is a major consumer of zinc in India.