CEAT Sees Tax Cuts Driving Demand for Tractor and Entry-Level Motorcycle Tyres

CEAT Ltd. expects India’s sweeping tax reduction to spark a sharp rise in tyre demand, particularly for tractors and commuter motorcycles, the company’s chief executive told Reuters.

The government last week unveiled a broad-based cut in indirect taxes on consumer goods — from essentials such as soaps to passenger vehicles — to counter slowing consumption and the ripple effects of U.S. trade tariffs.

As part of the overhaul, the goods and services tax (GST) on most tyres will be lowered from 28% to 18%, while tractor tyres will see a steep drop from 18% to 5%. The new rates come into effect on September 22.

“With affordability improving, we anticipate a surge in sales of entry-level motorcycles in rural and semi-urban areas. Tractor sales should also see a healthy lift,” CEAT Managing Director and CEO Arnab Banerjee told Reuters. He added that the company will fully pass on the tax benefits to customers.

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Although the farm tyre segment contributes roughly 10% of CEAT’s revenue, commuter motorcycles form one of its largest businesses, mirroring the dominance of budget two-wheelers in India’s mobility landscape. The company does not provide a revenue split for this category.

Looking ahead, CEAT expects its revenue in FY26 to expand at a double-digit pace, primarily driven by customers replacing worn-out tyres for two-wheelers and commercial vehicles. In the first quarter of FY25 (April–June), CEAT posted a 10.5% rise in revenue to Rs 35.3 billion ($399.8 million), aided largely by demand from the two-wheeler, truck, and bus segments. For the previous fiscal year, growth stood at 14%.

Like its peers, CEAT has faced tepid demand both from automobile manufacturers and from replacement markets. Currently, replacement demand accounts for 53% of its sales, automakers contribute 28%, and exports make up the remainder.