GST cut slashes tyre prices, set to double sales and boost small rubber businesses

Kottayam (Kerala): The recent reduction in GST rates is expected to create remarkable movement in the tyre market, with tyre sales potentially doubling, industry experts say. The cut is also likely to benefit other rubber products, improving overall sales and helping financially struggling small-scale enterprises recover.

Tyre manufacturers said that with the new GST rates, customers can now buy four tyres for the price they previously paid for three. Replacing all four tyres at once also enhances road safety, while reducing the financial burden of timely tyre replacement, the industry association pointed out.

Will increased demand push Rubber prices up? 

Questions remain over how this change will affect rubber prices. If tyre production increases to meet higher demand and domestic supply chains are timely, rubber prices could rise. India’s domestic rubber consumption stands at 1.4 million tonnes, with production at 0.85 million tonnes and annual imports of 0.6–0.7 million tonnes. Imports remain essential to bridge the gap. However, tyre companies have indicated that even with lower domestic production, they will maintain market stability to prevent price spikes. Regularised production and sales can ensure stable pricing, they added.

GST changes in tyres and rubber products:

• Tractor tyres: 18% → 5%
• Other tyres: 28% → 18%
• Tyre tread: 12% → 5%
• Medical: 12% → 5%
• Rubber bands and feeding equipment: 12% → 5%
• Other rubber items: 5% → 0%

Tyre market snapshot:

• Domestic sales: ₹99,000 crore
• Exports: ₹25,125 crore