Domestic tyre makers - Apollo, Ceat, MRF and JK Tyres - are defending their market share from the onslaught of global majors by expanding capacity, which will take their combined capacity to 4.4 million units by 2010.
As Bridgestone, Michelin, Yokohama, Goodyear and Pirelli are making inroads into the country's Rs 19,000 crore (Rs 190 billion) tyre market, local manufacturers are setting up new plants or expanding the existing facilities to take on the competition.
Apollo Tyres is investing Rs 320 crore (Rs 3.2 billion) to increase the output. The company is setting up a greenfield radial facility in Tamil Nadu for trucks, buses and cars. Besides, it has planned an off-the-road tyre facility in Gujarat.
Apollo Tyres Joint Managing Director Neeraj Kanwar said, "International players have given us a wake-up call. It will force us to improve our productivity and efficiency in terms of cost and other factors."
Ceat Tyres, the country's fourth largest tyre maker, will pump in Rs 800 crore (Rs 8 billion) to set up two facilities of 230 tonne/per day capacity. JK Tyres, which has reportedly bagged the order for Tatas' much-awaited Nano, will invest Rs 150 crore (Rs 1.5 billion) in a new plant.
India's largest tyre producer MRF does not want to sit on its oars either. It is planning a new facility in Tamil Nadu.
Global players, meanwhile, are betting big on their India plans. Some of them are looking at full-fledged manufacturing operations in the country. Confirming this, industry experts said Michelin, Yokohama and Pirelli are eyeing local production.
Bridgestone, which already has cornered the largest share in the passenger car radial category, is planning a truck and bus radial plant. It will invest $200 million for the greenfield plant.
Currently, the company imports CV radials from Thailand. Besides, it will hike radial production of passenger cars at its Madhya Pradesh plant to 11,000 units/per day.
Meanwhile, by aiming for a larger pie from the international market, local players are trying to take the battle to the shores of the multinational players. This strategy also helps them reduce dependence on the domestic market.
Apollo Tyres, for instance, will set up a 7 million units a year tyre plant, costing ¤ 200 million, in Hungary, which will also cater to the European and US markets.
The RPG group-controlled Ceat Tyres is setting up a dedicated export facility in India to cater to the Europe markets.
Domestic companies are also sprucing up their research and development activities to take on the major players.
Koshy Varghese, VP (marketing), MRF, said, "About 10 per cent of our turnover comes from exports and we want this figure to go up substantially. For this, we are taking our R&D efforts forward."
Rajiv Buddhiraja, Director-General, Automotive Tyre Manufacturers' Association (ATMA), said: "Although foreign tyre companies have started to do good business in India, results may not be as desired."
The Indian market is growing faster than the US and European markets and consumes 75 million tyres per year.
The industry has posted a 19-20 per cent growth in the last year. Within two years, according to ATMA executives, the market size will cross a whopping Rs 22,000 crore (Rs 220 billion).
