Sri Lanka's Tyre Industry: Challenges and Future Prospects

Sri Lanka's tyre industry plays a pivotal role in the country's manufacturing sector, leveraging its abundant natural rubber resources. The industry is characterized by strong export performance in niche areas, particularly solid tyres, but struggles with domestic market reliance on imports. This article examines the industry's production figures, market dynamics, and potential for future growth.

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Production Figures and Market Contribution

The tyre manufacturing sector in Sri Lanka is heavily focused on solid tyres, which account for over 60% of the country's rubber product exports by value (Sankalpa et al., 2013). According to reports from the Rubber Research Institute of Sri Lanka, the country produces approximately 65,000 metric tons of rubber products annually, a significant share of which is dedicated to tyre manufacturing. Solid tyres are predominantly exported, with major markets including Europe and North America, highlighting Sri Lanka’s global competitiveness in this niche.

Despite this success, the local industry has been unable to diversify significantly into other segments, such as passenger car and two-wheeler tyres. In 2020, domestic production met only 30% of the market demand, with the remainder being fulfilled through imports (Dissanayake, 2018).

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Market Dynamics and Import Dependence

The Sri Lankan tyre market is estimated to be worth approximately $500 million annually, driven by the automotive, agricultural, and industrial sectors (Jayasooriya et al., 2024). Growth in vehicle ownership and infrastructure development has led to increased demand for tyres. However, local manufacturers face stiff competition from imported products, which make up nearly 70% of the market, particularly in passenger and two-wheeler tyre segments (Abeysinghe & Francisco, 2009).

China, India, and Thailand dominate tyre imports to Sri Lanka, offering a wide range of products that cater to local consumer preferences. The prevalence of low-cost imported tyres has created a challenging environment for domestic producers, who struggle to compete on both price and technological innovation.

Efforts by the government to regulate imports through anti-dumping duties and tariffs have aimed to protect local manufacturers but have also led to increased prices for consumers. This emphasizes the need for policy reforms that promote local production while maintaining competitive market conditions.

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Future Trajectory and Opportunities

To secure a sustainable future, Sri Lanka’s tyre industry must focus on modernization and diversification. Investing in advanced manufacturing technologies and adopting eco-friendly production methods are critical for improving competitiveness. By expanding beyond solid tyres into high-performance and specialty tyres, the industry can tap into growing global markets.

The government’s role will be crucial in creating an enabling environment through tax incentives, reduced import duties on machinery, and dedicated industrial zones for rubber-based manufacturing. Public-private partnerships could foster innovation and attract foreign investment, further bolstering the industry’s growth prospects.

Market projections indicate steady growth in the demand for tyres, both locally and globally, with an expected annual growth rate of 5–7% in the coming years (Siriwardhana et al., 2022). This growth is driven by increasing urbanization, infrastructure development, and a rising focus on environmentally sustainable products.

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Conclusion

The tyre industry in Sri Lanka holds significant potential for growth and diversification. By addressing challenges such as import dependency and outdated technology, and by leveraging its strength in solid tyre exports, the industry can become a major player in global markets. With strategic investments in innovation, sustainability, and market expansion, Sri Lanka's tyre sector is poised for a transformative future.

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References

1. Sankalpa, J. K. S., & Wijesuriya, W. (2013). Export performance of rubber products in Sri Lanka. Journal of Rubber Research Institute of Sri Lanka. Access the report
2. Dissanayake, M. N. C. P. (2018). Analysis of the status of the rubber product manufacturing industry in Sri Lanka. DLIB. Access the study
3. Abeysinghe, A., & Francisco, G. S. (2009). Brand choice modeling for potential market segments in Sri Lanka. ASBIRES. View publication
4. Siriwardhana, M., & Piyatissa, D. D. (2022). Machine maintenance strategies in Sri Lanka tyre manufacturing. SSRN. Access paper
5. Jayasooriya, V. M., & Dasuni, P. D. P. (2024). Multi-criteria decision analysis for feasible rubber waste management. International Journal of Environmental Waste Management. Read moreTop of Form

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