Economywide and employment effects:
a) Exports and value addition: The Company estimates exports to account for 70-80 percent of sales and contribute to India's forex earnings. The Project will support value-addition in the domestic rubber product industry
b) Employment: The Project is expected to create significant direct local employment by creating 1,500 additional jobs in phase 1 alone.
Stakeholders Impact
c) Access to affordable customized agriculture tires to improve mechanization in agriculture and thereby, productivity. Customized tire products (OHT) lead to better traction, lower downtime and result in an increase in higher productivity. The Project will increase availability of value brand products (defined as the brands that are able to offer a quality competitive product at a lower price), which are more affordable than the regular customized tires.
d) Expanding outreach to more farmers and low-income states (LIS) with better extension services: The Company plans to onboard and extend attractive credit terms to distributors and wholesalers, who are mostly SMEs, to further market the product and enhance awareness of the use of customized tires to farmers.
e) Better productivity through investments in modern machineries and training; The Company aims to set their level of productivity to be higher than the India industry average and more aligned with the industrial benchmark in Europe and North America, through improvement in machineries and training.
Market Outcomes:
f) Competitiveness: Increased penetration of value brand OHT in India: Penetration of OHT in India is still relatively lower compared to developed markets such as EU and North America and other emerging markets outside. The Indian OHT market is less mechanized and more price sensitive due to low farm incomes and as a result the product range in Indian markets is not as specialized as in the EU and North America, where more application specific solutions are available. IFC anticipates more investments in this sector will happen, increasing the degree of customization and product range available, thus resulting in an increased penetration of OHT in India.
g) Integration by way of increased participation by Indian OHT tire players in the global market: The size of OHT segment globally is still relatively small compared to the entire tires industry at ~10% of total tire industry. At present, value brands hold around approximately 30% of the global market share, with Indian players holding half of this market share. Indian players such as the Company have the advantage to produce more of value brand segment of OHT tires, given conversion costs in India are lower than in any other manufacturing bases. This Project will demonstrate the competitiveness of Indian players in the global market and increase the overall share of Indian value brands.
