The tyre industry is set to roll at an increasingly faster pace with reduction in excise duty in the Union budget.
Coupled with higher demand from original equipment manufacturers (OEMs), the industry could look ahead to better profitability in the coming year over the current year.
According to analysts, reduction in the excise duty is expected to have a positive impact on tyre prices and industry sales. Tyre producers are expected to retain a part of the gains from the excise reduction, which will result in improvment in margins.
The continued emphasis on the road transportation related infrastructure will result in continued growth in share of roads in total freight movement. This is expected to result in increase in demand for truck and bus tyres.
The decline in peak customs duty on carbon black and synthetic rubber will also marginally reduce input costs of tyre companies.
Tyre demand is riding on the revival of the commercial vehicles industry. In 2002-03, growth in tyre production is expected to be between 12-14 per cent (in tonnage terms), on account of increase in original equipment demand from the commercial vehicles segment.
