Budget 2026 Boosts Tyre Demand, Says ATMA

Tyre Industry Sees Strong Growth Tailwinds from Budget 2026

The Indian tyre industry is poised to benefit significantly from the government’s enhanced infrastructure spending outlined in the Union Budget 2026-27, according to the Automotive Tyre Manufacturers Association (ATMA). Industry representatives believe that the sharp rise in public capital expenditure will have a direct and positive impact on tyre demand across multiple vehicle categories.

With the government earmarking ₹12.2 lakh crore for capital expenditure, the move signals a continued commitment to large-scale infrastructure development, which is expected to fuel long-term growth for tyre manufacturers.

₹12.2 Lakh Crore Capex to Drive Tyre Demand

ATMA emphasised that the tyre sector is deeply intertwined with the performance of India’s transport and infrastructure ecosystem. The substantial increase in public investment is expected to strengthen demand for tyres, particularly as new roads, logistics networks, and mobility projects take shape.

The association highlighted that improved road connectivity, railway expansion, urban transport initiatives, and logistics corridors will play a crucial role in boosting tyre consumption across both passenger and commercial vehicle segments.

Infrastructure Push to Strengthen Market Momentum

ATMA Chairman Arun Mammen stated that the growth of the tyre industry is directly linked to the pace of infrastructure expansion in the country. He noted that the government’s focus on ramping up public capital expenditure reinforces positive demand trends in the automotive sector.

Mammen further pointed out that investments in transport infrastructure, including dedicated freight corridors and urban mobility projects, will enhance vehicle utilisation and fleet expansion. This, in turn, is likely to create sustained demand for tyres from fleet operators and vehicle manufacturers alike.

Urban and Tier-II, Tier-III Development to Create New Opportunities

ATMA also underscored that several budgetary measures aimed at improving transport infrastructure in Tier-II and Tier-III cities are expected to stimulate economic activity and vehicle usage in these regions.

Better connectivity and urban mobility projects in smaller cities could open up fresh demand for both replacement tyres and original equipment tyres supplied to vehicle manufacturers.

Inverted Duty Structure Remains a Concern

Despite the overall optimism, ATMA expressed disappointment that the long-standing issue of inverted duty structure in the tyre manufacturing sector was not addressed in the Budget.

Mammen stated that this remains a key challenge for domestic manufacturers, as the current tax structure affects competitiveness and cost efficiency. He expressed hope that the government would take up the matter in the future in alignment with the broader Make in India initiative.

Outlook: Positive but Cautious

While the Budget is widely seen as favourable for the tyre industry, ATMA maintains a cautious outlook, acknowledging that policy refinements are still needed to create a truly supportive manufacturing environment.

Overall, the combination of increased infrastructure spending, improved connectivity, and growing vehicle utilisation is expected to create a strong growth trajectory for India’s tyre sector in the coming years.