India’s tyre industry is bracing for a tough fiscal year, weighed down by sluggish demand, volatile raw material prices and muted export growth. Revenue is forecast to expand just 7-8 percent – supported by modest price hikes and a marginal rise in volumes – marking a second straight year of single-digit growth. However, operating margins are set to contract sharply as natural rubber prices remain elevated despite recent moderation. In a wide-ranging discussion, Anuj Sethi, Senior Director at CRISIL Ratings, unpacks the factors shaping the sector, from price pressures and replacement demand to global headwinds and evolving trade dynamics.

How would you characterise the current fiscal year for the Indian tyre industry, considering its challenges and opportunities?

With volume expected to grow just by about 3-4 percent due to sluggish demand, overall revenue growth will remain in single digit for the second straight year, this fiscal. On the other hand, high raw material prices, especially of natural rubber, rose sharply over the past 12 months and have only recently begun to moderate. To a moderate extent, tyre manufacturers are increasing tyre prices in the replacement market to offset the impact of higher input prices, albeit operating profitability will still be impacted this fiscal.

The report mentions 7-8 percent revenue growth this fiscal year, supported by a 3-4 percent increase in realisations and volume. What specific factors could push growth beyond this forecast, and what risks might undercut it?

While realisation growth due to price hikes being undertaken by tyre manufacturers is a certain given sharp increase in natural rubber prices, higher than projected volume growth could take the growth higher than expected. With about 2/3rd of the domestic demand

coming from replacement segment, and it being the primary volume driver, any significant decline in that demand can impact the growth forecast other way.

Given that replacement demand is the primary volume driver, how do you assess the longevity of this demand surge in the context of evolving consumer preferences and vehicle usage patterns?

The replacement demand is expected to sustain over the medium term driven by the strong automotive sales achieved in previous fiscals.

With operating profitability projected to drop 300 basis points, what contingency measures are tyre makers considering beyond gradual price increases to mitigate this impact?

The price of natural rubber, which constitutes about half of the raw materials, continued to surge sharply in the first half of fiscal 2025. However, ability to pass on this increase is limited due to modest volume growth. Small price hikes and continued focus at improving operating efficiencies on an ongoing basis is another way to offset the impact to some extent.

Natural rubber prices have been highly volatile, reaching record highs and then falling to around INR 170 per kg. What is your outlook for natural rubber prices in the near to medium term, and what factors will likely influence their movement?

The sharp rise in natural rubber prices is due to a global shortage caused by inclement weather in major producing countries such as Thailand and Vietnam, which account for about half of the global production. Going forward, increase in supply with improving hectarage and slowdown in global economies is likely to drive correction in international rubber prices. In the last couple of months, some moderation in natural rubber prices has happened.

China has a surplus in crude oil-derived raw materials, including carbon black and other chemicals. Do you anticipate this surplus impacting global prices for these commodities, and how might Indian tyre makers benefit or face challenges as a result?

Share of natural rubber in tyre manufacturing is 47 percent, while carbon black accounts for ~20-22 percent. Should carbon black prices remain under control, it will benefit domestic tyre manufacturers.

Export growth is expected to remain muted at 2-3 percent. How does the current geopolitical climate, including sanctions or trade restrictions, further complicate Indian tyre makers’ access to markets in North America and Europe?

Export growth is expected to remain sluggish due to challenging business conditions in US and Europe. However, certain segments like off-the-road tyres are beginning to see better prospects as stocks with dealers are moderating. This could help players with presence in the off-the road- tyre segment.

Exports to key markets such as North America and Europe are under pressure due to economic challenges and unviable operating costs, leading to plant shutdowns in regions like US, Europe and Israel. Is the Indian tyre industry at risk of facing similar challenges, or does it have structural advantages that mitigate these risks?

Indian players are better placed compared to some of the western peers due to comparatively lower cost of operations, though operating profitability has come under pressure this fiscal because of higher imported rubber prices. Also, Indian players have flexibility to supply in small batch sizes unlike Chinese peers, and hence this also works to their advantage, more prominently in higher margin segments such as off-the road tyres.

Have tyre makers explored new international markets or alternative trade routes to counter supply chain disruptions and higher freight costs?

Not really; to circumvent the difficult environment around the Suez Canal, vessels are going around the Cape of Good Hope, adding 2-3 weeks and additional freight cost on exports. Some of the costs are being shared with the customers.

The report references Extended Producer Responsibility (EPR) regulations. How significant is the financial and operational burden of compliance for tyre makers, and what progress has been made in addressing this?

Adoption of EPR regulations is not expected to have a very sizeable impact on profitability, though it will lead to investments in strengthening processes and in technology.

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Doublestar Tires recently participated in Automechanika Dubai, presenting a range of products tailored to the specific demands of the Middle Eastern automotive aftermarket.

The company highlighted steady growth in regional demand for high-performance, wear-resistant tyres, driven by high ambient temperatures, desert terrain, the popularity of sport utility vehicles, and the increasing adoption of new energy vehicles.

At the exhibition, Doublestar showcased several specialised products, including desert all-terrain tyres, tyres developed for new-energy vehicles, and its NdGold truck and bus radial range.

The W01, designed for desert all-terrain vehicles, features a distinctive shoulder pattern intended to improve driving stability and safety. According to the company, its bionic wolf-claw tread design increases grip by 15 per cent while reducing rolling resistance, supporting off-road performance in demanding conditions.

Doublestar also presented the EV97, a passenger-car radial tyre explicitly developed for new-energy vehicles. The tyre is designed to accommodate the high-torque start-up characteristics of electric cars and incorporates a high-density belt layer and a reinforced crown belt layer. Its non-porous tread design is intended to balance appearance with safety performance.

In the commercial vehicle segment, the company introduced its NdGold truck and bus radial tyres. These use an ultra-wear-resistant compound designed to extend service life in high-temperature environments and improve overall vehicle safety.

Doublestar said its focus on differentiated and cost-effective products reflects its emphasis on innovation and supports its ambitions for further growth in global tyre markets.

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Continental has been re-elected as co-chair of the Tire Industry Project until 2029, extending its leadership role in the global tyre industry’s main sustainability forum.

The company said it would continue to contribute resources and technical expertise, particularly in tyre and road wear particles, end-of-life tyres, sustainability assessment methods and supply chain transparency.

The Tire Industry Project (TIP) brings together leading tyre manufacturers to address environmental and sustainability challenges across the sector.

The German tyre company has been involved since TIP’s founding in 2005.

“We are honoured to have been re-elected as Co-Chair. TIP fosters collaboration within the tyre industry, and beyond, with academia and other partners,” said Christian Kötz, Head of Continental Tires and a member of the executive board of Continental AG.

“Founded 20 years ago, TIP brings together the largest tyre makers to tackle complex overarching sustainability challenges – such as advancing scientific understanding of tyre wear emissions.”

“Continental takes its sustainability responsibilities seriously. This includes our active involvement in industry-wide associations. TIP is ideally suited to reinforce Continental´s ambitious sustainability agenda,” Kötz added.

Dr Larisa Kryachkova, Executive Director of the Tire Industry Project, said Continental’s re-election reflected its long-standing engagement with the initiative.

“Continental has been committed to TIP since its foundation 20 years ago,” Kryachkova said. “Its re-election as Co-Chair is a testament to Continental’s strong expertise and spirit of cooperation.”

She said Continental would work alongside Bridgestone, Goodyear and Michelin, which together will help shape TIP’s strategic direction as co-chair companies.

Operating under the auspices of the World Business Council for Sustainable Development, the Tire Industry Project focuses on sustainability across the entire tyre lifecycle, from raw material sourcing and manufacturing to use and end-of-life management.

TIP brings together 10 leading tyre companies that collectively represent more than 60 percent of global tyre production capacity.

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The year 2025 marked a significant chapter for VMI Group as it celebrated 80 years of operation, highlighting a landmark achievement for the international manufacturing firm. The company, which began as a modest workshop in Gelderland, Netherlands, has evolved into a worldwide operation serving the tyre, rubber and related industries across multiple continents.

The anniversary year was structured around the theme ‘Around the World in 80 Years’, featuring a series of celebratory events at major global facilities. Activities commenced with a virtual gathering connecting the entire organisation on 1 April. This was followed by large-scale in-person events in key locations including Yantai, China; Stow, United States; Itatiaia, Brazil; Leszno, Poland; and Vadodara, India. A particular highlight was a Family Day in Epe, Netherlands, which drew participation from over 3,000 employees and their family members.

The extensive campaign served not only to highlight the company's global scale but also to honour the collective contributions of its workforce. The celebrations were framed as a tribute to the employees and their families whose efforts over eight decades have shaped the company's unique and inclusive culture.

Underpinning the anniversary recognition is the company's longstanding commitment to innovation. Throughout its history, VMI has emphasised research and development, driving its growth with a continuous pipeline of new products designed for its global customer base.

Adding to the year’s milestones, VMI also received a gold EcoVadis award in 2025. This recognition underscores its standing as a leader in sustainability and environmental responsibility within the manufacturing sector.

Harm Voortman, CEO, VMI, said, “VMI is a global business, but we are also truly local in every country where we operate. We pride ourselves on being professional, rigorous and always working to the highest standards but also welcoming, open and friendly to everyone.”

Mike Norman, Chief Commercial Officer, VMI, said, “This great milestone has been reached and VMI is already looking forward to new challenges, new achievements and more celebrations- with innovation as the key to success in the future, just as it has been for the past 80 years.”

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With a series of new product launches aimed at meeting diverse needs, CEAT aims to target new set of customers who are looking beyond just cost.

Mumbai-based RPG Group’s flagship company CEAT, one of India’s most recognisable tyre brands, is at the cusp of a transformation. From being known for durability and value-for-money tyres, the company is repositioning itself as a technology and sustainability leader – offering products that don’t just meet performance benchmarks but also embody environmental responsibility.

The company recently launched SecuraDrive CIRCL, a limited-edition road-ready tyre with up to 90 percent sustainable materials. This feat makes the company one of the few global players to have introduced sustainable tyre that is just not a concept but a ground reality.

For CEAT, the immediate priority is to educate consumers about sustainable tyres. With the launch of the SecuraDrive CIRCL, available in limited numbers (264 tyres), it is taking a deliberate step to spark conversations around eco-conscious choices.

Lakshmi Narayanan B, Chief Marketing Officer, CEAT Tyres, told Tyre Trends, “The first piece is customers becoming aware. This isn’t just a conceptual product – it absolutely matches the performance of a conventional tyre. The idea is to give consumers a clear-cut option and an opportunity to buy into the philosophy of sustainability.”

The company has introduced two variants for the CIRCL range – Circle 50 (50 percent sustainable content) and Circle 90 (90 percent sustainable content). The limited-edition approach, according to CEAT, is intentional. “We want consumers to make a conscious choice to understand the value of sustainability in a product they use daily,” he added.

The focus, then, is not only on selling a product but on creating a new mindset. As Lakshmi Narayanan B put it: “This is as much a product story as it is a brand story. We want consumers buying into it for the right reasons.”

FROM CONCEPT TO MANUFACTURING REALITY

While many companies experiment with prototypes or pilot runs, CEAT insists that its CIRCL tyres are not small-scale experiments. Instead, they are proof of manufacturing readiness at scale.

“When you can make 264 tyres using 90 percent sustainable content, you have the capability to scale it up to any number,” said Lakshmi Narayanan B, pointing to the three years of dedicated work on CIRCL within CEAT’s broader five-year innovation journey. “This is not a pilot run – it’s literally scale manufacturing. What you see today is the outcome of years of work,” shared Lakshmi Narayanan B.

The company has also leveraged its past innovations – such as run-flat tyres and CALM technology – to strengthen manufacturing processes. “Each innovation adds capability. Whether it is sourcing sustainable materials or manufacturing in a new way, we’re now confident of handling such things at scale,” he explained.

For CEAT, scale is not just about numbers but about readiness. “We have proven that sustainability and performance can co-exist. And when consumer interest builds, we are absolutely ready to scale this into mainstream adoption,” Lakshmi Narayanan B added.

EMBEDDING SUSTAINABILITY ACROSS VALUE CHAIN

The tyre major recognises that sustainability cannot be restricted to a single product line – it must cut across the entire value chain. Renji Issac, Senior Vice President – R&D and Technology, CEAT Tyres, pointed out that CIRCL is only the beginning. “All the learnings from this programme will flow into circular product development, extended producer responsibility (EPR) and end-of-life tyre management. Sustainability doesn’t stop at manufacturing – it extends to what happens after the product’s lifecycle,” said Issac.

This approach also means working closely with suppliers, including MSMEs and startups, to adopt new processes and materials. “Initially there was resistance; why should they change (suppliers)? But over time, they have seen the opportunity. Today, our entire supplier ecosystem is committing to our sustainability goals. It’s a challenge but also a transformation,” averred Lakshmi Narayanan B.

Issac added that part of CEAT’s role has been to handhold startups developing new materials, helping them scale their innovations into market-ready solutions. “Some of these materials come from startups, and it’s not just about us developing the product. We are helping them bring their products to market,” he explained.

This ecosystem development is crucial because CEAT believes that innovation is only as strong as its supply chain. “It’s not only about what we make in-house but how the entire chain contributes to sustainability,” said Lakshmi Narayanan B.

A STRUCTURED FIVE-YEAR ROADMAP

Looking ahead, CEAT is guided by a five-year roadmap that balances near-term launches with long-term capability building.

Issac explained that CEAT has developed “a very firm two-year plan on products that will hit the market. Beyond that, the next three years are about developing enabling technologies. For every product roadmap, there’s also a technology roadmap and a capability roadmap. This ensures we’re not just reacting to the market but anticipating it.”

This structured approach allows CEAT to introduce innovations faster while preparing for regulatory and consumer shifts globally.

Lakshmi Narayanan B stressed that the company wants to stay ahead of the curve. “Our intent is to be proactive, not reactive. Whether it’s a current trend or a future wave, we want to be in the right place at the right time,” he said.

The roadmap is part of CEAT’s larger R&D strategy, which has already delivered multiple first-to-market products in recent times. “Run-flat tyres, 21-inch ZR rated tyres, CALM technology and now the sustainable tyre – all of these are stepping stones in our long-term direction,” Lakshmi Narayanan B explained.

GLOBAL RELEVANCE WITH INDIAN CONSUMER FOCUS

Although CEAT operates in global markets, the company deliberately chose India as the first market for CIRCL. The rationale is clear: while European demand is often regulation-led, CEAT sees India as a consumer-driven opportunity.

“In Europe, sustainability is often about regulation. In India, we want it to be a conscious consumer choice. That’s why we launched here first – we know Indian consumers are asking these questions, especially EV owners and younger buyers. It’s an early adopter segment, but it will grow,” shared Lakshmi Narayanan B.

The CIRCL tyres will initially be available in 8–10 metros, targeting discerning consumers with compact SUVs and EVs. The company acknowledges that the products come at a premium but insists the value proposition lies in sustainability with uncompromised performance. “The promise is clear: sustainability and performance equal to any conventional tyre,” Lakshmi Narayanan B emphasised.

Looking forward, the company believes the CIRCL project positions it strongly for future regulatory shifts worldwide. “With capabilities like this, we can leapfrog in global markets when the time comes,” Lakshmi Narayanan B noted.

From CIRCL’s limited-edition launch to a broader five-year innovation pipeline, CEAT’s future focus revolves around three pillars:

1. Consumer-first sustainability – creating awareness and demand among discerning buyers, particularly EV owners.

2. Ecosystem transformation – enabling suppliers, startups and partners to align with CEAT’s sustainability vision.

3. Structured innovation roadmap – delivering near-term product launches while building long-term capabilities.

As Issac summed it up: “A sustainable tyre is also a low rolling resistance tyre. There’s no conflict between sustainability and performance. In fact, they move in the same direction.”

“It’s a long game, but we’re happy to take the first step. Future is always bright,” concluded Lakshmi Narayanan B.

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