And miles to goâ€¦
traddling the journey of Indiaâ€™s automotive tyre industry since economic liberalization with vastly informed audience of Polymers and Tyre Asia may seem nothing short of audacity/ impudence on my part. To most of us who are caught up with the day-to-day industry affairs, the exercise might seem just a rambling excursion. But as they say life is what happens when we are busy making other plans. Likewise shape of a much more mature, dynamic and globally integrated Indian tyre industry is emerging while we are busy meeting our quarterly targets. So it might be worthwhile to take a pause and see how far we have traversed on this journey since economic liberalization initiated exactly 20 years ago.
First some number crunching. We mined the data from Automotive Tyre Manufacturers Association (ATMA) archives and learnt that the tyre production at the end of fiscal 1991 (when economic reforms went on stream in right earnest) stood at 18 million nos. Compare this with appprox. 12 million tyres â€˜a monthâ€™ during the year 2011. Meanwhile the industry turnover has grown from one billion dollar to almost 10 billion dollars, a growth of 1000 %.
How often we come across data on mobile phone density or car population indicating the lifestyle changes of an average Indian. Look carefully and the tyre industry numberâ€™s growth hides a much vital parameter â€“ economic growth of the nation as tyre industryâ€™s performance has been a bellwether for economic activity.
Technologically it is the radialisation drive that needs special mention. If we look at the past 20 years, we have come up a long way on the technology ladder. Radial tyres, which were a rarity 20 years ago have become a standard in todayâ€™s cars. While In passenger cars it has gone up from 10% to almost 100 % currently, in LCVs it has gone up from 5% to 30% and in Truck & Bus tyres it has gone up from 1% to 15%.
Now, an interesting aspect of the journey. Economic liberalization opened the floodgates of products and services to India. How Indians were deprived for a choice in a closed economy and have been spoilt for choice after economic liberalization is a part of the folklore. Tyres were also moved from restricted list to Open General License (OGL) as a part of economic reforms process. However, interestingly, the demand for tyres to the extent of 98% including demand for tyres for all new vehicles being introduced in the country is being met domestically. Of the few industries that vividly convey the story of Indiaâ€™s economic development over the last 20 years, tyre industry perhaps ranks at the top.
How has this been made possible is an interesting study in itself. For growth a â€˜touchâ€™ with existing realities is a must. All those products and services that first understood the ground realities and built on that have been successful. Literally and metaphorically, tyre represents the touch of a vehicle to terra firma. Indian tyres are expected to perform under difficult road and weather conditions from unmetalled rural roads to flawlessly topped new-age expressways, extreme cold to hot and wet conditions even in the same journey.
The road profile in India, too, presents a vastly diverse scenario. From a moped to a bullock cart, giant trawlers to tractors to jugaads can be seen plying cheek-by-jowl on Indian roads. Interestingly, there is a tyre for every need and every breed.Â India is amongst the very few countries that have indigenous capabilities to manufacture all conceivable varieties of tyres and for all road, load and weather conditions. Not only that tyres are readily available and easily serviced even in remotest cornersâ€™ of India.
No doubt domestic tyre companies have not spent much on basic research. However what sets them apart is their excellence in applied research. Sourcing technology through foreign collaboration and customizing the same to Indian roads is what has helped Indian industry go up the value chain.
And this perhaps explains the continued preference for domestically produced tyres.
However, as they say more things change, more they remain the same. Worldwide it is passenger car tyres that outnumber any other category of tyres. In India however Truck and Bus tyres continue to account for over 60% of industry turnover both in value and tonnage in India.
Indian tyre industry at an inflection point. The radialisation drive is gathering further momentum. The next 20 years will definitely witness a sea change in the industry scenario. A few leading firms are looking beyond Indian shores as a few majors are strengthening presence in India. These are indeed exciting times.