How to Start Tyre Retreading Business in India

Narendra Kumar

21 Oct, 2019

Retreading tires is the process of restoring old tires so that they can be used in automobiles. The process is technology-driven where the worn-out and damaged threads are replaced with new treads. Tyre retreading can be done using 2 methods – cold process and hot process. Currently in India retreading is done 50% by the organized sector and the remaining 50% by the unorganized sector.

Advantages of using Retreaded Tires:-

1. They cost almost 30 – 50 % less than the price of a new tire.
2. It is a low-cost production process – for making the new tires 80% natural rubber is used whereas for retreading only 25% of natural rubber is consumed.
3. Properly retreaded tires have almost the same life as the new tires.
4. The investment is comparatively less. The major part of the investment is involved in buying expensive machinery and molds
5. Preparing retreaded tires to go through similar performance related checks as used for new tires.
6. Retreading extends the life of used tires thus making the entire process of tire making recyclable.
7. The retreading process is more environmental friendly as retreading takes about 7 gallons of oil vis-à-vis 22 gallons of oil required for manufacturing the new tire.

What are the Industry Dynamics of the Tyre Retreading Industry?

Earlier majority of retreading used to happen in the unorganized sector. However, after the introduction of GST by the Indian government, the industry has seen a rising number of players entering the organized sector. Since retreaded types are cheaper compared to new radial tires, there is typically a good demand that exists in the market for this type of tires. With more brands entering the industry, levels of quality standardization will be ensured hence there are good chances of the tyre retreading industry catching up soon.

The retreading industry has a bright future. Reasons:-

• Sales of commercial vehicles have witnessed a tremendous The fact is backed up figures – there has been a growth of 4.5% in sales of commercial vehicles in the financial year 2017 over FY 2016. It is expected to grow at a rate of 5-6 % in the current financial year.
• Better roads and increasing infrastructure network
• Increased use of radial tires by commercial vehicles
• GST has reduced the prices being charged by the organized sector for retreaded tires.

What are the Necessary Licenses and Registrations that need to be Procured by the Tire Retreading Business before Starting Operations?

1. Company Registration for business under the Companies Act 2013^[1] that regulates the incorporation of a company and defines the responsibilities of a company and its directors or owners.
2. The Trade license permits the operation of the business unit in a particular area. The municipal cooperation of each area issues this license.
3. Registration under Factories Act 1987. This registration is mainly meant for ensuring the safety and health and welfare of workers in a factory.
4. MSME Udyog Aadhaar certification is mainly for Micro, Small and Medium-scale industries. Supported by the Ministry of MSME it facilitates and encourages the growth and proper functioning of small-scale
5. GST Registration for selling of products in different states in India.
6. No objection certificate from the area Pollution control board
7. Professional Tax registration is a necessity for employers engaged in trade.
8. Register with Employee’s Provident Fund that was created to protect the interest of employees after their retirement.
9. ESI (Employees’ State Insurance Corporation) registration that provides monetary and medical benefits to employees.
10. Quality and standard approval from the Bureau of Indian Standards which would guarantee the safety of the retreaded tires. Rubber and rubber-related manufacturing units need to take the BIS certification to start operation. The Bureau is mainly responsible for safeguarding public health, protect consumers from hazardous and risky products and provide quality assurance to the general public of a product.

As a mark that the retreaded products follow international standards and the manufacturing follows audited processes it is a good idea to get the ISO certification too. ISO is associated with quality and placing this mark on the product will only help gain the confidence of customers and create good brand value for the company.