Indian tyre companies draw up road map to steer through tariff jitters

Despite low US exposure, Indian tyre makers are crafting mitigation strategies to address looming tariff threats and persistent margin pressures due to high input costs

Despite low exposure to the US, Indian tyre companies are drawing up measures to offset the impact of potential tariffs at a time when raw material prices are already denting margins.

 

Leading players like Ceat, Apollo Tyres and JK Tyres downplayed the immediate financial impact of potential US tariffs and retaliatory duties from countries such as Sri Lanka, citing their current limited exposure to the American market.

 

Ceat Managing Director Arnab Banerjee said US sales form a low single-digit share of the overall revenue, while Apollo CFO Gaurav Kumar pegged the company's US exposure at $100 million, out of its $3 billion topline.

 

The tyre makers, however, are drawing up contingency plans to offset any possible reciprocal tariffs.

 

To mitigate risks, they are diversifying exports to Europe, Africa, and Southeast Asia, aligning with India’s Atmanirbhar Bharat mission and reducing dependency on volatile international markets. Industry bodies, meanwhile, are pushing for policy support in the form of lower import duties on key inputs and incentives for sustainable growth.

 

Banerjee noted that while Ceat’s international business saw a slight decline in Q4 due to global uncertainties, the company has drawn up a contingency plan to offset a possible 44 per cent reciprocal tariff from Sri Lanka.

 

“We’re hopeful of a better outcome, especially with some relief already visible in our tracks business, where the tariff has dropped to 4 per cent,” he said, adding that Ceat remains committed to its long-term investment plans in the US, including product development and launches across categories. 

 

Apollo Tyres, which currently serves the US largely through its European operations, is adopting a wait-and-watch approach. “We're not making any strategic shifts until there’s clarity on tariff structures. If tariffs are broadly applied, pricing will adjust accordingly," said Kumar.

 

On the issue of US tariffs, Anshuman Singhania, managing director of JK Tyre and Industries stated that a 25 per cent duty has been levied on truck and passenger radials, and 10 per cent on other categories. “We are not solely dependent on the Americas. We also export to the Middle East, Southeast Asia, Europe, and Brazil. This geographical diversification is part of our mitigation strategy,” he added.

 

Singhania also noted that India may hold a competitive edge in the US market compared to countries like Thailand and Vietnam, which face higher tariffs. “We are constantly evaluating propositions for our US customers,” he said, while also indicating that JK Tyre is closely monitoring market conditions for potential price adjustments in response to ongoing raw material volatility.

 

TK Ravi, COO of Eurogrip Tyres, cautioned that all companies may not escape the impact, especially those with deeper US integration or those eyeing the market as a future growth lever. “India remains relatively well-positioned compared to other exporting nations and should see this as an opportunity,” he said.

 

The tariff turbulence comes at a time when tyre makers are already grappling with shrinking margins. Ceat’s FY25 consolidated net profit declined by 26.5 per cent year-on-year (Y-o-Y), while Apollo’s dropped nearly 35 per cent. Rising costs of key raw materials like natural and synthetic rubber, carbon black, and crude derivatives have added to the pressure.

 

Similarly, JK Tyre reported a 42.6 per cent Y-o-Y decline in net profit for the fourth quarter of FY25, at Rs 97.04 crore. For the full year, FY25 profit fell by approximately 37 per cent to Rs 495.04 crore, down from Rs 786.23 crore in FY24.

 

Singhania attributed the decline to rising raw material prices, particularly natural rubber, and an inability to fully pass on costs to customers due to subdued OEM demand.

 

“Last year saw almost a 10 per cent price increase in input costs, which we couldn’t fully pass on as OEMs were cautious with volumes,” he said.

 

After touching a 13-year high of nearly Rs 240 per kg in 2024, domestic rubber prices are now in the range of around Rs 190-200 per kg. This rise in prices consequently increased production costs for tyre companies.

 

He added that JK Tyre, a leading supplier of truck radial tyres, faced further pressure from weak demand in the commercial vehicle segment. “Raw materials were definitely a major factor, but export volatility also played a role. In Mexico, for instance, tariff uncertainties and an 8 per cent depreciation of the peso against the rupee also impacted our consolidated topline,” he noted.

 

According to Nikhil Dhaka, vice-president at Primus Partners, companies are responding by localising supply chains, exploring sourcing alternatives to China and Russia, investing in backward integration, and stepping up digitalisation to enhance operational efficiency. While selective price hikes have been introduced, subdued OEM demand and stiff competition are limiting the ability to pass on cost increases fully.

 

With global trade dynamics in flux, the industry’s resilience will depend on strategic agility and its ability to balance cost inflation with market expansion.