NITI Aayog Proposes Standards and GST Cuts for India's Waste Tyre Sector

A national conference convened by NITI Aayog on May 4, 2026 has proposed national quality standards for tyre pyrolysis oil and recovered carbon black, separate HSN classification codes and a reduction in GST from 18 per cent to 5 per cent on recycled tyre products to address deep inefficiencies in India's waste tyre management system. Stakeholders estimate that the absence of product quality standards alone causes a loss of nearly Rs 7,500 crore in potential annual revenue.

India recycled around 3 million metric tonnes of tyres in FY 2024-25, comprising 1.6 million tonnes from domestic waste and 1.4 million tonnes from imports, making it the seventh largest tyre market globally. Pyrolysis accounts for the largest share of tyre recycling at 2.68 million tonnes in 2024-25. However, weak traceability, lack of standardisation and limited market demand for recycled products mean much output is downcycled into low-value applications. Currently, waste tyres and crumb rubber share the same HSN classification, making it difficult to monitor movement and detect diversion to informal channels.

The conference, Paryavaran NITI Manthan, brought together policymakers, regulators and industry leaders to identify the sector's structural gaps. Recommendations include mandatory continuous emission monitoring for pyrolysis units, procurement guidelines and incentives for industries using recycled materials, and pathways to bring informal recyclers into the formal system through platforms such as the MSME Udyam Assist initiative. The government also plans to allow import of waste tyres for pyrolysis, provided the plant has capacity to produce recovered carbon black.

NITI Aayog's proposals closely echo concerns raised by the Centre for Science and Environment in its 2025 Waste-Tyre Dialogue, including poor traceability, informal recycling and gaps in taxation and enforcement. Addressing the GST disparity between tyre pyrolysis oil and conventional petroleum products, where petroleum falls outside GST while TPO does not, was flagged as essential for creating a level playing field. India's tyre industry produced 4.2 million metric tonnes in 2024-25 with 2.5 million tonnes consumed domestically and 1.5 million tonnes exported, but the recycling ecosystem has not kept pace with this production growth.

Key figure — Rs 7,500 crore in potential annual revenue loss