India's tyre manufacturers are preparing a new round of capital expenditure for FY27 and beyond, as capacity utilisation across key product categories approaches peak levels and demand remains steady across replacement and original equipment manufacturer (OEM) channels.

Apollo Tyres, CEAT, JK Tyre & Industries, and Balkrishna Industries have collectively outlined capital expenditure plans covering truck and bus radial tyres, passenger car tyres, off-highway tyres, carbon black, upstream facilities, automation, and sustainability-related investments.

The capacity expansion drive comes at a time when tyre manufacturers are facing rising raw material, crude-linked input, freight, and energy costs due to geopolitical tensions in West Asia. Companies have already begun implementing price increases, although the pass-through to customers is expected to occur with a lag, particularly in the OEM channel.

Despite these pressures, investment plans remain in place as factories operate at or near full capacity and manufacturers seek to expand capacity across replacement, OEM, export, and premium product segments. Apollo Tyres has outlined capital expenditure of Rs. 35 billion for FY27, with nearly 80% allocated to growth and capacity expansion projects. The company stated that capacity utilisation had reached 90% across its operations in India and Europe.

"Overall, given the healthy demand outlook, we expect full capacity utilisation and therefore will continue to progress on our planned expansion initiatives," said Gaurav Kumar, Chief Financial Officer of Apollo Tyres, during the company's Q4 FY26 earnings call.

Kumar stated that approximately Rs. 30 billion of Apollo's FY27 capital expenditure will be invested in India, where the company is expanding truck and passenger car tyre capacity. The remainder will be invested in Europe, where the company is increasing passenger car tyre production capacity at its Hungary plant.

Apollo's expansion plans come despite expectations that raw material costs will increase by the high teens on a sequential basis. The company has already announced price increases of 6-8% for the current quarter and indicated that further increases may be necessary.

"Demand remains strong across categories and channels, with April showing equally strong volume growth, and we expect the same momentum to continue through Q1," Kumar said. He added that geopolitical developments in West Asia had introduced "significant volatility" to raw material, energy, and logistics costs, which are expected to affect margins in the near term.

CEAT is also preparing for higher spending in FY27, although the company has stated that it will calibrate capital expenditure depending on developments in the cost and demand environment. CEAT Managing Director and Chief Executive Officer Arnab Banerjee stated that the company's capacity utilisation currently ranges between 85% and 90% across categories. For FY27, CEAT expects growth and routine capital expenditure of approximately Rs. 13-14 billion.

CEAT's capital expenditure plans follow FY26, during which the company's standalone revenue exceeded Rs. 150 billion for the first time. However, the company has highlighted potential near-term demand moderation due to cost pressures.

"As of now, as we enter FY27, demand looks good in aftermarket, in OEMs, but there is also an attendant steep raw material price hike," Banerjee said. "Overall demand outlook is expected to moderate out, but broadly may remain supportive."

CEAT expects raw material prices to rise by more than 15% in Q1 and approach 20% by the end of the quarter. The company has already implemented price increases in the replacement market and plans additional increases.

JK Tyre has announced a major expansion programme. The company's board has approved brownfield expansions for passenger car radial (PCR) and truck and bus radial (TBR) tyres at a total cost of Rs. 49.80 billion, to be implemented in phases through to 2029. This is in addition to Rs. 11.30 billion of expansion projects already under implementation.

Together, JK Tyre's planned investments amount to Rs. 61.10 billion and are expected to increase TBR and PCR capacities by 24%. Sanjeev Aggarwal, Chief Financial Officer of JK Tyre, stated that the company had initiated the earlier Rs. 11.30 billion expansion programme because it was operating at almost full capacity utilisation. The additional Rs. 50 billion expansion programme will be completed in three phases over the next three to four years.

"Total cash outlay on yearly basis would be roughly around Rs. 12 billion and this will not put any dent on the cash availability with the company, which is going to be even much more stronger," Aggarwal said. He added that while the company would utilise debt to fund the expansion, it expected EBITDA generation over the next three to four years to support the additional borrowing.

JK Tyre has also maintained its demand outlook for FY27.

"The demand in the tyre industry is expected to remain buoyant for FY27 on the back of healthy growth in both the replacement and OE markets," Managing Director Anshuman Singhania said during the company's Q4 FY26 earnings call. "We have not seen any order books getting cut from any of the OEM, be CVs, passenger or any other line."

However, Singhania added that geopolitical uncertainty had disrupted supply chains, although underlying demand remained unchanged. Balkrishna Industries (BKT) is also increasing investment as it expands beyond off-highway tyres into on-highway segments.

The company's board has approved an additional capital expenditure of Rs. 20 billion for capacity expansion and infrastructure development across off-highway and on-highway tyre categories, artificial intelligence-enabled automation, and sustainability initiatives. The investment will support the company's carbon black expansion, commercial vehicle radial tyre project, passenger car radial tyre project, and broader on-highway plans.

BKT has already completed a new carbon black production line at Bhuj, increasing capacity to 265,000 tonnes per annum, and expanded captive power generation capacity at the site from 40 MW to 64 MW. The company is now working to complete the remaining carbon black expansion project, which will increase total capacity to 360,000 tonnes per annum. The company has also completed Phase 1 of its commercial vehicle radial tyre project, involving capital expenditure of Rs. 7.50 billion and adding fungible capacity of 800 tyres per day for commercial vehicle radial and off-highway tyre production. Phase 2 of the commercial vehicle radial project and the passenger car radial tyre project are scheduled for launch in FY27.

Rajiv Poddar, Joint Managing Director of Balkrishna Industries, stated that the company expects capital expenditure of Rs. 15-18 billion in FY27. BKT's overall capital expenditure plan through FY29 amounts to approximately Rs. 68 billion, of which around Rs. 30 billion has already been invested, leaving approximately Rs. 38 billion for the remaining period.

The company has entered the truck and bus radial segment, relaunched two-wheeler tyres, and plans to introduce passenger car radial tyres by the end of the current calendar year. The capital expenditure plans announced by tyre manufacturers coincide with FY26 vehicle sales data from the Society of Indian Automobile Manufacturers (SIAM). This has supported both OEM and replacement tyre demand. The replacement market is also benefiting from an ageing vehicle parc, higher vehicle utilisation, infrastructure-led freight movement, and rural demand.

Exports are another factor behind the investment cycle. According to government data, India's tyre exports reached Rs. 273.12 billion in FY26, an increase of 9% compared with the previous year despite supply chain disruptions, elevated logistics costs, and trade uncertainty. The United States remained the largest export destination, while Germany, Italy, Brazil, and France continued to be important markets.

The Automotive Tyre Manufacturers Association stated that tyre manufacturers have invested in greenfield and brownfield projects in recent years, supported by demand, exports, manufacturing competitiveness, and product development.

However, cost pressures remain the primary near-term risk. Tyre manufacturing remains heavily exposed to crude-linked inputs such as synthetic rubber, carbon black, and processing oils. Natural rubber prices, freight rates, and currency movements also affect margins.

The industry is entering FY27 facing two competing factors. Companies continue to invest as capacity remains constrained and demand remains firm, while rising input costs and ongoing price increases could affect demand and profitability in the near term.