The off-the road (OTR) tyre market in India would continue to grow in 2022 and in coming years as India plans to invest $1.4 trillion on several infrastructure projects by 2025 including projects related to ports, railway, roads, etc.
The Government of India has also collaborated with Japan for infrastructure development in Northeastern states of India. All these activities are going to increase the use of OTR vehicles in the country over the course of next 5-10 years, which is further going to augment demand for OTR tire in OEM as well as replacement segments, with later witnessing higher growth due to expanding OTR vehicle fleet.
The demand for off highway tyres is at an all-time high in the post pandemic world, creating a significant rise in tyre exports globally. This is a time of great innovation and advancement for the industry, owing to countless growth opportunities such as rapid urbanisation, heavy-duty construction, agricultural growth, large-scale mining, and global technological advancement. The tyre industry has indeed bounced back stronger than ever and was relatively unaffected by the pandemic, owing to the continued rise of all the industries it caters to directly and indirectly.
In 2021, Indian OTR vehicle tyre market stood at 11.2 million units in terms of volume. The share acquired by the agri machinery in India is 59.51 per cent by 2020 while the share of mining and construction segment stands at 37.24 per cent and is going to increase in the coming years, according to the research firm. The replacement market is rising with continuous increase in the fleet of OTR vehicles. In 2021, the replacement market share stood at 65.59 per cent while the OEM market share was 39.41 per cent.
Said Rajiv Poddar, Joint Managing Director, BKT Tires, “The market for global OTR tyres is forecast to reach $7.57 billion by 2025, growing at a CAGR of 4.75 per cent from 2020 to 2025. The Indian OTR market in particular is extremely dynamic, and is fast emerging to become one of the most promising future ready sectors in the country. Expected to grow at a rate of 15 per cent during 2020-2025 exceeding the global outlook, it is filled with boundless business prospects.”
Speaking on the key segments driving the demand for OTR tyres, Poddar said, “Key segments driving this demand globally and in India are construction and mining. The onset of speedy industrialisation and the privatisation of coal are some of the factors contributing immensely to the same. Reasons further propelling this growth curve are the rapid expansion and urbanisation of developing countries, quick adoption of technological innovation within the construction domain, which requires the most advanced tires, and the evolution of new age OTR offerings that can operate in different terrains.”
Increasing population and rising urbanisation are boosting the infrastructure projects landscape. With upcoming and ongoing projects, the construction sector is the third-largest contributor to the economic growth. The Indian government is taking steps to boost construction activities across the country. The National Infrastructure Pipeline (NIP) plan, the Affordable Rental Housing Complex (ARHC) scheme and investments in the industrial sector open great opportunities in the construction sector in 2022.
The Ministry of Environment has approved 10 coal-mining projects in different states of India. The ministry states that the projects will have an output of 160 million tonne annually. These projects are going to bring a quick rise in the demand for OTR vehicles, which in terms is directly going to boost sales of OTR tyres in OEM as well as replacement segments.
Ankit Maheshwari, Head – Sales & Marketing, Trident International sees positive impact on the government’s push towards ‘Atmanirbhar Bharat’ and development of new infrastructure projects. The auction of coal blocks to private players for commercial coal mining on revenue sharing model can also create demand for OTR tyres in India, according to him.
OEM and replacement market
The recent push in mining activities has created momentum in mining equipment sales as there are some bulk orders for heavy earthmoving and mining equipment by various miners in the country. This is going to create demand push in OTR segment from OEM as well as replacement markets. With the mining and industrial construction segment witnessing accelerated demand in India, there will be a high demand for new equipment, escalating OEM sales.
According to Maheshwari, the recent investments in construction and mining sectors will require more OTR equipment, which will boost demand of OTR tyres.
Radialisation to pick up
In Indian OTR sector, radialisation is still at its nascent stage. However, with mining segment picking up which demands for more radial tyres, radialisation can pick up in future. The topmost off-highway segment that is witnessing high demand for radial tyres is mining sector, predominantly on account of expanding fleet of mining vehicles. Considering the severe operational conditions in underground mines, radial tyres are the only solution to meet the customer’s requirement.
Product and technology trends
OTR tyre manufacturers are implementing technical innovations in their tyres such as radialisation, tyre pressure monitoring system, cut and chip resistance, etc, to keep up with the expectations of the equipment manufacturers. Modern OTR tyres are equipped with high abrasion resistance and fuel- and energy-efficient features.
An emerging design trend for the OTR segment is an ever-expanding shift towards radial tyres, from bias range, which has led to several breakthrough technologies in the domain. Furthermore, he adds, “as giant earthmoving machines have had a steady growth in demand, the large and ultra-large tyres that cater to this segment have witnessed great innovation and re-modelling in recent years, to offer new-age solutions for the heavy-duty equipment.”
According to Maheshwari, the emerging technology trends in OTR tyres will be towards fulfilling the requirement of higher load carrying capacity, faster speeds, low rolling resistance with the advent of EVs and value-added technology like connectivity/IoT-embedded sensors to make the tyres more durable, efficient, long lasting and smart.
Impact of BSVI emissions on OTR biz
The advent of BS-VI has not been a factor significantly affecting the OTR tyre export business. As a segment that caters extensively to advanced machinery and heavy-duty equipment in the construction and mining domain, as well as specialised agricultural operators, the Bharat Stage VI new emission standards do not overlap with the customer base of the OTR tyre sector. Hence, it has not had a direct impact on international trade and commerce for the segment.
Said Poddar, “With a great technological shift world over and rapid global development, the OTR tyre market is all set to grow more than ever. Some of the biggest leaps for the sector include innovation providing the very best support to the industrial world and diversified offerings. Significant rise in the demand for construction, agriculture and mining machinery will boost the OTR tyres market even further in the coming decade.
India is also set to become a key player in the OTR domain, owing to its recent strides in tyre modernisation and industry leadership. Some upcoming trends that are likely to propel this growth include the adoption of low aspect ratio tires, advanced tire monitoring systems and the rising demand for radial tyres that offer higher flexibility and stability.
The recent large volume buying in the mining equipment after the pickup in mining activities in the country will also push for more demand for OTR tyres, especially tyres for mining applications in the coming years.
With reference to the various development activities taken up by the government, the OTR tyre market is expected to gain majorly in the coming years as TechSci Research highlights the major demand drivers as:
Growth in infrastructure: Increasing population and rising urbanisation are boosting the infrastructure projects landscape. With upcoming and ongoing projects, the construction sector is the third largest contributor to the economic growth.
Government initiatives: The Indian government is taking steps to boost construction activities across the country. The National Infrastructure Pipeline (NIP), the Affordable Rental Housing Complex (ARHC) scheme and investments in the industrial sector open great opportunities in the construction sector in 2021.
Increase in mining projects: The Ministry of Environment has approved 10 coal-mining projects in different states of India. The ministry states that the projects will have an output of 160 million tonnes annually. These projects are going to bring a quick rise in the demand for OTR vehicles, which in terms is directly going to boost sales of OTR in OEM as well as replacement segments.