Bangladesh's tyre market is projected to grow at around 9 percent annually until 2020, riding on higher vehicle sales and rising investments by foreign players, a Dublin-based research firm said yesterday. 

The government is expected to reduce duties on raw materials for the tyre industry, which, ultimately, will boost sales, said Research and Markets, a noted research company, in a study. 

The country's annual tyre sales are close to Tk 1,500 crore and two-wheeler and light automotive tyres account for majority of the sales, according to industry insiders. 

The monthly demand for motorcycle tyres has increased to 50,000 pieces and that of CNG-run three-wheelers to 60,000 pieces, they said.

The tyre market is dominated by two-wheelers, whose fleet exceeds all others by a significant margin, according to the study.  

The firm said Dhaka remains the major market witnessing higher tyre sales across Bangladesh.

Despite rising automobile sales, the replacement segment continues to dominate the market, it said.

Over the past few years, Bangladesh has been emerging as another developing country in Southeast Asia offering considerable growth opportunities across diverse industry segments including automotive.

Currently, the tyre industry in Bangladesh is largely dependent on imports from countries like India, China, Japan and Indonesia due to a scarcity of raw materials (natural rubber), a lack of indigenous tyre production units as well as skilled labour, the study said.

Bangladesh spends around Tk 1,000 crore to import more than 15 lakh pieces of tyres a year mainly from India, Japan and China, according to importers, distributors and sellers.

Bangladesh also imports tyres from Vietnam, Thailand and Indonesia.

However, the scenario is expected to witness a paradigm shift in the coming years as several global leading tyre companies are gearing to set up manufacturing units in the country.

India's tyre giant CEAT, for example, is setting up a plant in Bangladesh in partnership with local AK Khan & Company. 

CEAT also aims to export back at least 30 percent of the products manufactured at the plant in Mymensingh, taking advantage of the duty benefits the neighbouring country has extended to Bangladesh.

In November 2012, India extended duty-free benefits to all Bangladeshi products except for 25 alcoholic and beverage items.

Several foreign investors are even eyeing Bangladesh as the next important destination over the coming years.

Besides tyre companies, many automotive players have also voiced their desire to commence manufacturing operations in Bangladesh, which, in turn, would drive investments in the tyre market as well.

Last year, 73,051 motorised vehicles were registered in Dhaka alone, up 34 percent year-on-year, according to Bangladesh Road Transport Authority. Countrywide, 160,639 vehicles were registered last year.

Currently, Apex Husain, Gazi Group, Meghna Group and Rupsha Tyre are the leading players in the light truck, minibus, microbus, motorcycle, autorickshaw and easy bike tyre markets.

Besides, leading global companies like MRF, Dunlop, CEAT and Goodyear have been selling their tyres in the country through their exclusive distributors.