Entering an era of transformation
Mining and construction growth over the last several years has helped the overall market to grow, construction, and industrial have continued their steady performances, more in line with overall economic growth.
Over the next five years, the industry will be entering a transformative era and will be shifting from a transactional-focused model to a solutions-oriented approach to business. Much of this will be driven by the two key core OTR segments: mining and construction.
Tyre industry experts are anticipating a strong finish for the OTR/specialty tyre market in 2022 and a solid start in 2023 due in part to historically strong mining commodity pricing (copper and gold in particular). They noted, however, that the industry continues to face headwinds in labour, parts, shipping and global economic volatility.
The experts also saw positive trends in the construction and aggregates segments with solid job growth. The infrastructure package has provided financial resources and supplied raw materials needed for investments in EV, green energy, utilities and other key infrastructure areas.
Higher demand from mining & constructionAccording to a report by Research and Markets, the OTR tyre market in India was valued at around $1.4 billion in 2020 and is expected to reach $2.3 billion by 2026, growing at a CAGR of around 8.3 per cent during the forecast period. The growth is attributed to the increasing demand for construction and mining equipment, coupled with the government's focus on infrastructure development.
A recent study conducted by the strategic consulting and market research firm, BlueWeave Consulting, revealed that India Off the Road (OTR) Tyre Market was worth 10.81 million units in the year 2021. The market is projected to grow at a CAGR of 8.5 per cent, with sales forecast to reach 19.17 million units by the end of 2028. India OTR tyre market is booming because of the rising demand for off-road tyres which offer the best traction on uneven surfaces. Also, the benefits of OTR tyres are used in various pieces of machinery for use in industries like construction, mining, mechanised agriculture, and industry. The demand for radial OTR tyres has been seen to rise recently over bias tyres, and this trend is anticipated to continue due to its many benefits. Moreover, OTR tyres continue to be most popular in Asia-Pacific, but demand is increasingly rising in Europe and North America.
Rajiv Poddar, Joint Managing Director, Balkrishna Industries, said, “With India’s focus on infrastructural development, we are predicting steady growth in demand for tyres from the construction sector for the coming few years. The Indian market is growing at a rapid rate and is providing opportunities to grow our footprint. We too are developing India-centric products, be it for Mineforce for the mining sector or Commander series for the agricultural sector, or the to-be-launched additions to the Earthmax series. We have more than 1100 SKUs dedicated to the Indian markets, which are created with a keen focus on quality, which is our top priority. This applies to all our products across the world, to all our systems and services. What bears testimony to this fact is the acceptance that BKT tyres have found amongst high-quality conscious European and American users.”
He added, “We are continuously investing in our R&D teams to understand the increased demand and needs of the OTR sector and to design new and innovative products with the latest technology that cater to the changing needs of the OTR sector.”
The demand for OTR has hit an all-time high propelled by strong requirements from both the domestic and international markets. Driven by mechanisation, urbanisation, massive investments in public and private infrastructure and rise in construction activities, the country is emerging as a global manufacturing base for OTR tyres.
These tyres are used in heavy-duty trucks and vehicles for off-road activities such as mining, agriculture, logistics and construction. The growing use of off-road vehicles such as excavators, special purpose vehicles, telescopic handlers, dump trucks and tractor are also fuelling the OTR tyre business.
A major chunk of the domestic demand is from the construction equipment sector. It is on the cusp of becoming the second largest globally by 2030. The overseas market is also turning to India to fill the void left by the established tyre makers.
According to Rajiv Budhraja, Director General, Automotive Tyre Manufacturers’ Association (ATMA), for every tonnage of production, the margins of PCR tyres are 20 per cent to 25 per cent higher that OTR tyres. That is why some prominent manufacturers are dropping it. “This has created space for high quality moderately priced tyres in the export market, giving Indian makers the opportunity to fill the void,” he added.
The series of anti-dumping duties by Europe and the US on Chinese tyres since the past three to four years also have worked in favoue of the Indian companies. “The global anti-China sentiment and the ‘China plus one’ factor have greatly helped the Indian players. Hence, the Indian tyre makers are charting their exclusive export strategy in these two regions,” added Budhraja.
Speaking on the market size of OTR tyres for the mining segment, Ashok Chhajer, Senior General Manager – OE Sales, BKT Tires, said, “The market for LMT tyres has the potential to expand rapidly owing to the increase in the demand for coal, which is one of the main energy sources in India. The requirement for coal in India is about 1.1 billion tonnes, but we are currently producing approximately 700 million tonnes. The increased demand has led to increased mining activity, thus increasing the demand for LMT tyres. Since India has been focusing majorly on the mining industry and aims to become one of the primary markets for mining activities in the next 5–10 years. Govt. has drawn policy too in the same direction – with the privatization of coal, the demand for OTR tyres is set to rise in the coming years.”
He added, “We are one of the prime players in this segment and our expertise and state-of-the-art technology, as the global players in the OTR tyre segment, are equipped to contribute to the growth of the mining sector of India.”
“Within the mining sector, our focus is on underground mining—i.e., tyres for LHDs, jumbo drills, shuttle cars, etc. As you may be aware, operating conditions in underground mining are quite different from surface mining, this includes working in tight spacers, very severe underfoot terrain, besides operating in underground mines there are many more safety concerns. If a tyre fails prematurely in an underground mine, whether due to service damage or manufacturing-related problems, it presents many difficulties. We developed solutions for the underground mining industry to specifically address these challenges,” said Shyam Gyanani, Co-Founder and Executive Director, Trident International.
Choosing the right tyre“Choosing the right tyre ensures safety, longevity and fuel savings, which increases with the fleet size and when tyres are used in tough conditions. Unfortunately, a few customers use low-quality tyres from China and end up increasing their maintenance cost. Usually, the performance of a tyre is determined by its fuel-efficiency, braking and wet grip and the level of emitted noise,” said Subhajit Chandra, Divisional Head-Mobile Crane Division, Liebherr India.
Importance to R&DSaid Gyanani, “In underground mining especially, R&D plays a very important role. As machines are getting bigger, faster and more expensive. This puts a lot of pressure on the capital structure of any business. Recently, new regulations mandated the engines to be Bharat VI compliant. In terms of the actual output, there is almost no improvement, but this increased the cost of machines by 15 to 20 per cent. It is more important than ever to make sure that your machines are as productive as they can be. You really don’t want idle expensive machines because the tyres are not performing or getting damaged or punctured frequently.”
“Sooner there will also be a trend of electrification in construction equipment. We are already seeing this trend in Europe. Even this will have an impact on the tyre. The requirements of rolling resistance, the requirements of higher torque, etc. are going to affect the performance of the tyre,” he added.
“R&D is the backbone of BKT and we invest approximately 5 per cent, which is why we have the best quality tyres. We are the only Indian tyre company to have not one but three R&D centres – two centres dedicated to compound development in Bhuj and Chopanki and one dedicated R&D lab for only carbon black research in Bhuj. Moreover, we have a tyre test house in each of our five plants for Indoor testing in addition to an outdoor testing track, and a mould plant,” said Chhajer.
He added, “Huge investments have been made in creating world-class labs, and sourcing the latest tech equipment. Additionally, we have qualified and experienced engineers in our state-of-the-art infrastructure, which gives us the edge. More so, we follow a stringent quality control process before any product is introduced to the market. Every tyre at various stages of production has to undergo 500 quality checks and the onuses are on the R&D team. We introduce on average 80- 90 new products every year. These are all based on in-depth market research and market analysis by our R&D team.”
Challenges for OTR tyres in IndiaAlthough there are a lot of opportunities for OTR tyres in India due to the growing mechanisation in the construction and infrastructure industry, The OTR tyre manufacturers are facing many challenges, which are hampering the industry growth. For instance, growth in the OTR tyres market in the country is directly related with the growth of mining activities. Changes in the mining industry and market are also the impetus behind changes in large OTR tyres themselves. One of the issues facing the industry these days is the changing requirements of mining operation vehicles. Trucks are getting bigger and hauls are getting longer. Manufacturers have to develop products that will withstand these more intense conditions. New technological trends include compounds that are more heat-resistant and tread patterns that dissipate heat for longer hauls. For shorter hauls that require tight operations, better compounds are being developed to resist severe tyre cuts while in operation. Matching tyre to the task is becoming more challenging.
Said Poddar, “As other industries, we too have been battling the surge in the cost & availability of raw materials, rising fuel costs, and the inbound and outbound logistics costs due to the war. However, we are well placed and all geared up to take on these challenges and have managed to overcome them with a strong strategy in place.”
“The supply chain had problems, but many of these have been mostly addressed. Fr our export business, there were some delays on account of poor availability of shipping containers. However, for our domestic customers we’ve always maintained a large inventory for quick turnaround’s. We didn’t have any instances of our customers waiting for tyres due to non-availability. We endeavour to supply on demand, even if this means that we have to overstock. This has been our strategy right from the beginning and across all capabilities,” said Gyanani.
He went on to add: “For instance, the raw materials needed for the foam filling process and even the machinery needed is imported. Today we four filling stations. We started with one, but we deliberately built a certain amount of redundancy in the system. These stations or production units are like a complete setup to fill tyres.”
Both the cost of the press machines used in the production of OTR tyres and the cost of the raw materials are expensive. As a result, none of the market's players can afford to spend a lot of money on R&D. While farm equipment requires different tyres for tractors, construction, and mining equipment is outfitted with heavy load bearing with a strong design and treads for better traction. The requirement for tyre retreading or replacement in the case of OTR tyres is determined by usage patterns and environmental factors. It is necessary to develop and test a wide range of tyre sizes because the size of tyres changes based on the application and terrain. R&D expenses rise as a result of customisations, a large range of products, advancing technology, and changes in demand. Because research is more expensive, producers tend to concentrate on their current product lines, which slow the expansion of the OTR ttyreires market's more recent sectors.
Need for customised tyres for EVsThe increased focus of the government on sustainable construction practices and energy efficiency is one of the reasons why the construction sector in India is seeing a rise in e-mobility technology. The adoption of EV technology within the construction industry has other factors as well. One of the key benefits of electric machinery is its lower emissions compared to traditional diesel-powered equipment. This will be highly beneficial in reducing the carbon footprint of construction sites.
Electric machinery often requires less maintenance and has a longer lifespan compared to its diesel counterparts, making them a more cost-effective solution in the long run. In addition to developing EV excavators and loaders, there has also been a rise in the use of electric cranes, bulldozers and material-handling equipment. These machines offer a high level of mobility and efficiency. E-mobility-focused companies in India are also focused on developing better battery technology.
Tyres are an important factor in any vehicle, enabling a vehicle to move forward with proper efficiency. Electric vehicles have specific requirements for their tyres mainly due to the differences in weight distribution, braking behaviour, and acceleration compared to traditional gasoline vehicles.
Said Chhajer, “Customised tyres for EVs are designed to handle the unique demands of these vehicles, providing improved performance, longer lifespan, and better fuel efficiency. These tyres are optimised for low rolling resistance. Additionally, they may also have specialised tread patterns and materials to enhance grip and handling, especially during high-speed and hard braking conditions, ensuring the safety and stability of the vehicle.”
Within the construction industry, the roads are not always smooth and the machinery needs to be able to carry heavy loads. Customised EV tyres can also have unique tread patterns that can not only sustain rough terrains and weather conditions but can also handle heavy loads. This might help receive the most efficient output of the e-mobile machinery and increase the tyre life.
“E-mobility solutions within the construction industry are inevitably on the rise and have specific tyre requirements. It is essential for the machinery and tyre manufacturers to step into this landscape and design e-mobile machinery and EV-friendly tyres to ensure the best output of these machinery and to help the construction industry build a sustainable process design,” added Chhajer.
The road aheadThe OTR tyre industry in India is anticipated to exhibit significant growth in the future, the demand for OTR tyre is on the rise in the domestic market with demand coming from construction, mining (bigger OTR tyres with bigger capacity dump trucks) and material handling equipment segments.
With More Projects lined up like coal consumption will be doubled by 2025 and planned to increase the total mining area. The cement industry will also start moving with new projects and plants as the government is developing Infrastructure pan India (road construction, new railway lines, and other village development programme).
Ports are one of the key segments, especially from the Indian market perspective. The entire project to develop ports and connectivity will provide an opportunity for the Port equipment segment growing up and prompt the use of a new range of tires. In fact, the existing ports are seeing more demand coming in.
Overall, the OTR tyre market in India presents a promising growth opportunity for players in the tyre industry, fueled by the country's economic growth and infrastructure development plans.