September 12, 2025 – CEAT Ltd., one of India’s largest tire manufacturers, expects a significant boost in sales of tractor tires following a sweeping cut in consumption taxes, the company’s chief executive said Friday.
The new tax structure, effective September 22, lowers the levy on tractor tires to 5% from the current 18%, marking the steepest reduction across CEAT’s product range. Other tires, including those for trucks and motorcycles, will shift to an 18% tax bracket from 28%.
“Farm sales could see a strong pickup as the cost of tractor tires comes down for rural customers,” said Arnab Banerjee, Managing Director and CEO of CEAT, in an interview with Reuters. “We will pass the benefit of lower prices directly to farmers.”
Tractor Tires in Focus
The farm segment accounts for about 10% of CEAT’s total revenue, making it smaller than two-wheeler and truck categories but strategically important. Tractors represent a critical market in India, where more than half of the workforce is engaged in agriculture and rising input costs have been a persistent challenge for farmers.
Lower tire prices could encourage more farmers to replace worn-out tires and invest in better traction and durability for fieldwork. Tractor tire demand is closely tied to the broader agricultural economy, with sales often fluctuating based on monsoon conditions, crop cycles, and government support programs.
Industry analysts say the tax cut could also strengthen India’s domestic tire market against imports by narrowing price gaps and improving competitiveness for homegrown brands like CEAT.
Broader Market Outlook
While tractor tires are set for the steepest gains, CEAT also expects sales of entry-level motorcycle tires to rise in semi-urban and rural households, where two-wheelers are the main mode of transport.
In fiscal 2025, CEAT reported a 14% revenue increase, followed by a 10.5% rise in the April–June quarter of fiscal 2026, driven largely by replacement demand across two-wheeler, truck, and bus segments. Replacement tires account for 53% of CEAT’s revenue, while 28% comes from sales to automakers and the rest from exports.
The company forecasts double-digit revenue growth in fiscal 2026, fueled by rising demand for both farm and commercial vehicle tires.
