Tyre Industry Growth Poised by Capex Boost in Budget 2026
The Union Budget 2026-27 has given a major boost to the Indian tyre industry, primarily through a sharp rise in public capital expenditure that is expected to spur demand for tyres across vehicle segments., primarily through a sharp rise in public capital expenditure that is expected to spur demand for tyres across vehicle segments. According to the Automotive Tyre Manufacturers Association (ATMA), the government’s plan to raise public capex to ₹12.2 lakh crore highlights a strong focus on infrastructure development that could underpin long-term demand growth for tyres.
The tyre sector depends heavily on the performance of roads, rail connectivity, urban mobility networks, and logistics corridors, areas central to the Budget’s development push. ATMA Chairman Arun Mammen noted that this enhanced investment will reinforce tyre demand momentum across both passenger and commercial vehicles by improving vehicle utilization and promoting fleet expansion.
Budget measures aimed at expanding transport infrastructure in Tier-II and Tier-III cities are expected to unlock fresh demand opportunities for tyres used both as replacements and in original equipment. However, ATMA also pointed out that the longstanding concern over the inverted duty structure affecting tyre manufacturing competitiveness remains unresolved, leaving scope for future policy action.
Editor’s View: Why Budget 2026 Matters for the Tyre Industry
The tyre industry outlook is closely tied to infrastructure investment because tyres are ultimately consumed where vehicles travel most, on roads, freight corridors, and rail-linked logistics chains. A bigger public capex outlay means not just more asphalt and highways but also more miles driven, delivering direct demand to tyre manufacturers. This Budget signals sustained government focus on building a future-ready transport ecosystem that benefits tyre usage across commercial fleets and personal mobility alike.
Still, structural issues like the inverted duty structure can erode competitiveness for domestic manufacturers by making imported inputs costlier relative to finished goods. Addressing these via targeted reforms would help Make in India goals, potentially making Indian tyre makers more competitive globally.
