Viewpoint: Strength and weaknesses of India’s tire industry

Article by K Ganapathy a veteran of the Indian tire industry now living in the US. He has recently set up a website ( https://www.iaapt.info/ ) as a platform from the discussion and advancement of quality concepts in the tire manufacturing sector. In this article, he gives his personal views on the key factors behind the development of the tire industry in India and how it is shaping up to current and future challenges:

Up until 1935, industrial development in India was abysmal, and there was nothing much to transport so demand for tires was minimal and supplied through imports.  The main tire organisations supplying imports to the Indian market were Dunlop (U.K), Firestone & Goodyear (USA).

World War II, however, increased the need for tires and two factories were established: one by Dunlop in 1936 at Calcutta and Firestone in 1941 at Bombay.

After gaining independence, India opted for democratic socialistic system ion which the ‘private sector’ and the word ‘profit’ were anathematic.

But transportation requirements, eventually led to licenses being granted in 1960s to put up six factories with 4 lacs capacity each: Premier at Kerala, MRF, Dunlop at Chennai, Ceat at Bombay, Goodyear at Haryana, Inchek at Calcutta.

Cars were a luxury in developing India, so focus was to truck tires, which took a major share of the product mix. Even then a shortage of truck tires prevailed, so that India-based tire companies focused on the domestic market and never bothered about exports.

Indian tire companies were blessed in another way. As railways were badly managed, all industries were forced to rely upon road transport. A consequent shortage of trucks led to over-loading of vehicles that also to negotiate roads that were narrow and bad in most part of the country.

These and a range of related factors, meant that truck tires had to be tough as well as durable. Quality became an essential need and industry had to cater to the need.

We who were in the industry at that time used to boast that the world’s best tires are made in India.

Companies had cartel arrangement. Government once or twice allowed tire imports but they were unable to withstand the grueling conditions prevailing and were bursting like balloons. So, the cartel prevailed and tires were not sold but allotted.

Besides shortages another point in favour of tyre industries was technical knowledge.

Factories in India were small and knowledgeable technicians from overseas companies were reluctant to stay in India for long time. So, the technicians sent by them were less knowledgeable. This means that local technicians had to learn the technical aspects with the help of short-term visitors and by practical experience.

Added to that chemical industries like Bayer helped young persons to become licentiate of Plastics & Rubber Institute so that India’s tire industry became technically sound.

Another aspect that helped India was the type of plants set up till 1970s.

Without going into reasons, machinery and equipment in almost all plants were old, discarded ones, reconditioned. Frequent failure, change of parts etc. were normal occurrence. It made engineering learn about equipment well, workers and supervisors learnt to manage such machineries and equipment.

This continued until the oil crisis in 1974 that affected very badly all countries, more so developing nations like India. However, three new factories were established at that time: Modi, with Continental, JK and Apollo with General Tire.

There were many smaller units but were focusing on other types of tires. Real changes came in the country only when the government was forced to have an open-door policy in 1990s. This was because country faced acute foreign exchange crisis.

It brought revolutionary changes in automobile industry also and slowly export became a serious need. Old companies lost their leadership and new companies became stronger. Now India is a hub of vehicle manufacturing. It is difficult to believe 25 million vehicles are made in a year now.

Current scenario

Today, truck tires still dominate ratio of production: Truck tires – 65%; Passenger car tires 21%; and all other tires 14%. When it comes to selling, OEM is 24%, replacement 62% and export 14%. Bias and radial ratio now for truck/bus tyres is two third and one third.

Even though number of factories are more it is controlled mainly by four: MRF (31%) Apollo (21%) JK (14%) Ceat (14%). We can add TVS (4.5%), Goodyear (3.7%), Balakrishna (8.8%) and others (3%).

These are figures of 2014. It may have changed a little bit but main organisations are only these. Michelin and Bridgestone are concentrating only on radial tires. Export is less than 20% and so scope is there to increase it.

The main threat to India’s tire industry is from China as their prices are incredibly low and they practically dump including in India.

But when it comes to quality China is nowhere near India.

Then bus and other tires do not require such durable and tough tyres made by India. This is where China is winning over India.

If industry and government work together they can find a way. Fortunately, present government is proactive.

Another factor is that the US is trying to disincentivise its entrepreneurs from producing abroad to cut cost. If they succeed it can create an action chain. But industries are at loggerheads with the government.

There is a myth about the use of more natural rubber by India. Overall statistics show NR percentage use is more in India. It is so because India produces higher percentage of truck tires. Use of compounds is based on need.

Indian exports started because developed countries, particularly the US, switched over to radial altogether. There was a need for bias tires, which was fulfilled by India. India is yet to take up radial in a big way.

Indian percentage of export is only 15%. The Chinese threat is manageable. So, I do not expect any major crisis to the industry. In my 40 years of service and involvement I have seen many such crises, but they have mostly helped to improve the industry.

One important lesson I learnt was that a skilled worker even in trying situations never play around with the quality of his output. He may sulk, quarrel, agitate, produce less but never make a shoddy product. It is his pride.

That is why I have taken up workers education as my payback to the industry that took care of my livelihood.