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Business Standard
16 hours ago
- Business
- Business Standard
India's top 18 states' revenues to edge up 7-9% in FY26, says CRISIL
India's 18 largest states, accounting for over 90 per cent of the country's gross state domestic product (GSDP), are likely to record a marginal uptick in revenue growth of 7–9 per cent in FY26, compared to the 6.6 per cent growth seen in FY25, according to a report by rating agency CRISIL on Tuesday. This growth, slower than the decadal average of about 10 per cent, is expected to lift these states' cumulative revenue to approximately ₹40 trillion in FY26, up from ₹37.26 trillion in FY25. The anticipated uptick in state revenues will mainly be driven by steady Goods and Services Tax (GST) collections and continued support from the Centre through tax devolutions and grants. States' own tax revenues, which make up about 52 per cent of their total income, are projected to grow by roughly 8 per cent in FY26, reaching ₹21.08 trillion. Within this, GST collections, which account for the largest share, are expected to grow 9-10 per cent to ₹9.18 trillion, slightly lower than the 10.2 per cent increase observed last year. 'While better tax compliance and the continuing shift in economic activity from the unorganised to the organised sectors are expected to support GST revenue, subdued domestic consumption and inflation could dampen growth and pose a downside risk to that expectation,' said Anuj Sethi, Senior Director at CRISIL Ratings. Revenue from liquor sales is also projected to grow 9-10 per cent, reaching ₹4.17 lakh crore, driven by a combination of rising consumption and higher excise duties. On the other hand, revenue from petroleum taxes is expected to rise by just 2 per cent to ₹2.87 trillion. Other sources, such as states' non-tax revenue, are also expected to grow slowly at around 4 per cent. The 18 states include Maharashtra, Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh, Telangana, Rajasthan, West Bengal, Madhya Pradesh, Andhra Pradesh, Kerala, Odisha, Punjab, Bihar, Chhattisgarh, Haryana, Jharkhand, and Goa. After a contraction of about 10 per cent last fiscal year, grants-in-aid from the Centre are expected to recover, with projected growth of 3-4 per cent. This rebound is attributed to increased outlays for centrally sponsored schemes and local body grants, as outlined in the latest Union and state budgets. The report also noted that states will continue to benefit from central tax devolutions, which are expected to grow 11-12 per cent this year, following a nearly 14 per cent increase in FY25. 'Rising gross tax collections, supported by growth in income tax and GST collections, remain a key driver,' said Aditya Jhaver, Director, CRISIL Ratings. CRISIL's projections depend on steady nominal GDP expansion and could be affected by uncertainty in global markets, weak domestic demand, and inflation trends. However, states could outperform projections if tax buoyancy exceeds expectations or if there is stronger central government support. 'To ensure sustainable revenue growth, states will have to focus on expanding their own revenue and improving collection efficiency,' the report concluded.
Time of India
a day ago
- Business
- Time of India
State finances outlook: Crisil projects 7-9% revenue growth for 18 states in FY26; GST, devolutions to drive momentum
Revenue growth of India's 18 largest states is projected to rise marginally to 7–9% in FY26, reaching Rs 40 lakh crore, compared with 6.6% in the previous year, according to a report by Crisil Ratings. These states collectively account for over 90% of the country's gross state domestic product (GSDP). The uptick is expected to be driven by steady Goods and Services Tax (GST) collections, robust tax devolutions from the Centre, and a recovery in grant transfers after a contraction last year, ANI reported. States draw their revenues from two main streams: own revenue sources (SOR), including GST, liquor and petroleum taxes; and transfers from the Centre, comprising tax devolutions and grants. Crisil estimates that states' own tax revenue (SOTR) will grow by 8% this fiscal, with GST and liquor taxes being key contributors. 'GST collections remain the driver for states' own taxes, with one-year growth projected at 9–10% for this fiscal, marginally lower than the last,' said Anuj Sethi, Senior Director at Crisil Ratings. He noted that expected nominal GDP growth of 9% would support GST receipts, although subdued domestic consumption and inflation may pose downside risks. Liquor tax revenue is also expected to see a stable 9–10% rise, similar to the 9.6% growth recorded in FY25. This will be fuelled by a 5–6% rise in consumption volumes and hikes in excise duty by several states. Meanwhile, petroleum-related tax revenue is expected to grow by just 2%—in line with last year—due largely to static tax rates and only marginal increases in fuel consumption. On central transfers, tax devolutions are forecast to grow 11–12% this fiscal, after clocking nearly 14% in FY25. 'Rising gross tax collections, supported by growth in income tax and GST collections, remain a key driver,' said Aditya Jhaver, Director, Crisil Ratings. Grants from the Centre are also likely to recover with a projected 3–4% rise, aided by increased allocations for centrally sponsored schemes (CSS) and Finance Commission grants to local bodies, as reflected in budget estimates for FY26. Last fiscal, grants fell 10% due to lower transfers under CSS, amid subdued capital expenditure by state governments, the report noted. Stay informed with the latest business news, updates on bank holidays and public holidays . Discover stories of India's leading eco-innovators at Ecopreneur Honours 2025
Mint
20-07-2025
- Business
- Mint
Replacement demand to drive tyre sector revenues by 7-8% this fiscal: Crisil
New Delhi [India], July 20 (ANI): India's tyre sector is set to see steady revenue growth of 7-8 per cent this fiscal, driven by replacement demand that accounts for half of annual sales, even as offtake by original equipment manufacturers (OEMs) will likely be subdued and exports steady, said Crisil Ratings in a report. The report added that the rising premiumisation is expected to give a slight leg-up to realisations. However, escalating trade tensions and the risk of dumping by Chinese producers diverting inventories because of US tariffs could pose challenges. Operating profitability is likely to remain steady at 13-13.5 per cent, supported by stable input costs and healthy capacity utilisation. This, along with strong accruals, lean balance sheets and calibrated capital spending, should help sustain the sector's stable credit outlook, the report added. The Indian domestic demand remains the mainstay, propelling 75 per cent of total volume with exports making up the rest. Anuj Sethi, Senior Director, Crisil Ratings, said, "Volume growth is seen at 5-6 per cent this fiscal, mirroring last fiscal. The replacement segment (accounting for 50 per cent of volume) is set to grow 6-7 per cent on the back of a large vehicle base, strong freight movement and rural recovery. OEM volume (25 per cent) will likely rise 3-4 per cent, supported by steady two-wheeler and tractor sales, and modest growth in passenger vehicles and commercial vehicles. Export volume (25 per cent) is expected to grow 4-5 per cent, supported by demand from Europe, Africa and Latin America."The report further added that the export momentum, however, comes with risks. The US, accounting for 17 per cent of India's tyre export volume last fiscal, and 4-5 per cent of overall industry volume, has imposed reciprocal tariffs on several Indian goods, potentially eroding price competitiveness. And steep US tariffs limit China's access to that market, raising the risk of excess supply being divertedinto price-sensitive markets such as India. To curb cheap imports, India imposes anti-dumping and countervailing duties, including a 17.57 per cent levy, on large truck and bus radial tires from China. However, a broader influx of low-cost tyres across other segments could pressure domestic realisations without timely safeguards. Besides, stiff competition in the replacement market will keep operating profitability rangebound at 13.0-13.5 per cent this fiscal. With nearly half of the raw material imported, the sector is exposed to global prices and fluctuations in foreign exchange rates. Poonam Upadhyay, Director, Crisil Ratings, said, "India's tyre sector, grappling with margin pressure, could see price competition intensify if US tariffs push low-cost Chinese products being dumped. Competitive intensity is already capping realisations in the replacement segment, so the risk of prolonged under-recovery of input cost remains high. To counter, manufacturers are likely to maintain capital expenditure (capex) at ~ ₹ 6,000 crore this fiscal, focused on high-utilisation passenger car radials and two-wheeler capacities, along with automation and backward integration to improve cost efficiency and protect profitability." In fiscal 2025, natural rubber prices surged 8-10 per cent owing to supply disruptions andas prices of crude-linked inputs such as synthetic rubber and carbon black rose 10-12 per cent. This led to margin erosion by 300 basis points, given the limited cost pass-through in the OEM and replacement segments, the report added. (ANI)
India.com
18-07-2025
- Automotive
- India.com
India's Tyre Sector Poised To Clock 8% Revenue Growth In FY26: Report
Mumbai: India's tyre sector will see steady revenue growth of 7-8 per cent during the current financial year, driven by replacement demand that accounts for half of annual sales, even as offtake by original equipment manufacturers (OEMs) will likely be subdued and exports steady, according to a Crisil Ratings report released on Friday. Rising premiumisation is expected to give a slight leg-up to realisations. However, escalating trade tensions and the risk of dumping by Chinese producers diverting inventories because of US tariffs could pose challenges, the report states. Operating profitability is likely to remain steady at 13-13.5 per cent, supported by stable input costs and healthy capacity utilisation. This, along with strong accruals, lean balance sheets and calibrated capital spending, should help sustain the sector's stable credit outlook, according to the report. The report is based on an analysis of India's top six tyre makers, catering to all vehicle segments and accounting for 85 per cent of the sector's approximately Rs one lakh crore revenue. Domestic demand remains the mainstay, propelling around 75 per cent of total volume, with exports making up the rest. Crisil Ratings senior director Anuj Sethi said, 'Volume growth is seen at 5-6 per cent this fiscal, mirroring last fiscal. The replacement segment, accounting for around 50 per cent of volume, is set to grow 6-7 per cent on the back of a large vehicle base, strong freight movement and rural recovery. OEM volume (25 per cent) will likely rise 3-4 per cent, supported by steady two-wheeler and tractor sales, and modest growth in passenger vehicles and commercial vehicles. Export volume (25 per cent) is expected to grow 4-5 per cent, supported by demand from Europe, Africa and Latin America.' The export momentum, however, comes with risks. The US, accounting for around 17 per cent of India's tyre export volume last fiscal, and 4-5 per cent of overall industry volume, has imposed reciprocal tariffs on several Indian goods, potentially eroding price competitiveness. And steep US tariffs limit China's access to that market, raising the risk of excess supply being diverted into price-sensitive markets such as India, the report further states. To curb cheap imports, India imposes anti-dumping and countervailing duties, including a 17.57 per cent levy, on large truck and bus radials from China. However, a broader influx of low-cost tyres across other segments could pressure domestic realisations without timely safeguards. Besides, stiff competition in the replacement market will keep operating profitability rangebound at 13.0-13.5 per cent this fiscal. With nearly half of the raw material imported, the sector is exposed to global prices and fluctuations in foreign exchange rates. In fiscal 2025, natural rubber prices surged 8-10 per cent owing to supply disruptions, and prices of crude-linked inputs such as synthetic rubber and carbon black rose 10-12 per cent. This led to margin erosion by around 300 basis points, given the limited cost pass-through in the OEM and replacement segments.
Time of India
18-07-2025
- Automotive
- Time of India
Indian tyre industry's revenue may grow by 7-8% in FY26; trade risks loom large: CRISIL
India's tyre industry is expected to post a revenue growth of 7-8 per cent in fiscal year 2026 (FY26), primarily driven by a strong replacement demand, according to CRISIL Ratings . The replacement market , which accounts for nearly half of tyre sales, is projected to grow 6-7 per cent this year (by volume), driven by a large vehicle base, steady freight movement, and signs of rural recovery. In comparison, sales to original equipment manufacturers (OEMs) are expected to rise by 3-4 per cent, while exports may grow 4-5 per cent, supported by demand from Europe, Africa and Latin America. 'Volume growth is likely to mirror last fiscal at around 5–6 per cent,' said Anuj Sethi, senior director, CRISIL Ratings. 'The replacement market remains the backbone of the sector.' US-China trade war may hurt Indian tyre sector However, the sector faces multiple external risks against the backdrop of a trade war between the USA and China, which is creating uncertainties across sectors, from consumer electronics to automobiles. The US, which accounts for about 17 per cent of India's tyre exports , has imposed tariffs on Indian goods, potentially hurting competitiveness. Additionally, steep tariffs imposed by the Donald Trump administration on Chinese tyres may result in excess supply being dumped in price-sensitive markets like India, according to CRISIL. To counter dumping, India currently imposes duties including a 17.57 per cent levy on large truck and bus radials from China. But CRISIL warned that inflows of low-cost tyres across segments could still dent domestic margins. Input cost pressures are another challenge. Natural rubber prices rose 8–10 per cent last fiscal, while crude-linked inputs such as synthetic rubber and carbon black also saw double-digit increases. These spikes led to an erosion of operating margins, which are now expected to remain rangebound at 13–13.5 per cent this year. Despite these pressures, tyre companies are expected to maintain capital expenditure at around ₹6,000 crore, focusing on high-utilisation passenger car radials and two-wheeler tyre capacity. Strong balance sheets and steady accruals are expected to support credit profiles, with interest coverage projected to improve to about 8 times. The sectoral outlook remains stable, according to CRISIL, but trade policy, raw material prices and domestic demand will be key monitorables in the coming quarters.
