Tyre Recycling (Small Scale) Project Report: Industry Trends, Plant Setup, Machinery, Raw Materials, Investment Opportunities, Cost and Revenue

Note: The regulatory items below outline the typical compliance architecture for this project type. Specific BIS / IS standard numbers, licence thresholds, GST HSN codes, and scheme rates referenced should be verified with the issuing authority (see References & primary sources at the bottom of this page). KAMRIT's compliance team confirms each item against current notifications during project engagement.

Tyre recycling (small scale) projects in India work under MNRE at the centre, the SERCs at state level, and the DISCOM that signs the PPA. For a project of this scale (₹0.9 crore - ₹13 crore), the licence and clearance path KAMRIT walks through is:

• Environmental clearance under EIA Notification 2006 above threshold capacity
• IEC 61215 / 61730 / 62804 product certification from accredited test labs
• State nodal agency approval (NEDA, MEDA, GEDA, etc.) and land-use conversion
• PLI National Programme on High Efficiency Solar PV Modules participation where eligible
• CEA Electrical Inspectorate sign-off plus grid synchronisation approvals from RLDC/SLDC

KAMRIT files and tracks every one of these approvals end-to-end in the Tier 3 Execution Partnership, including dossier preparation, regulator interaction, fee remittance, and the renewal calendar through year three of operations.

<p>The Indian tyre recycling sector operates within the broader rubber and waste management industry, structured around three primary product streams: crumb rubber and rubber granules, recovered steel, and textile fibre. The leading revenue-generating segment by product is rubber or crumb rubber, which commands the largest share of market output. Approximately 3 million metric tonnes of waste tyres were recycled in India during 2024-2025, of which 1.6 million metric tonnes were domestically generated and 1.4 million metric tonnes were imported.

Tyre pyrolysis alone accounted for 2.68 million metric tonnes of processed material during the same period, highlighting the dominance of thermal recycling routes in India's small-scale ecosystem. Total tyre production reached 4.2 million metric tonnes in 2024-2025, confirming that the domestic supply of end-of-life tyres is substantial and growing.</p><p>The sector is broadly segmented by technology into mechanical recycling (ambient and cryogenic grinding) and thermal recycling (pyrolysis). Mechanical recycling, which processes tyres into crumb rubber through shredding, granulating, and classifying at ambient or cryogenic temperatures, produces output in the 0.1 mm to 4 mm range.

Pyrolysis, a batch or continuous thermal decomposition process, yields pyrolysis oil, carbon black, and steel wire. Within the small-scale segment, batch-type pyrolysis plants of 5 to 12 tonnes per day capacity dominate the landscape due to their lower capital requirements and operational flexibility. The industry also supports ancillary businesses including equipment manufacturing, logistics and collection services, and the downstream manufacture of rubber-modified products such as flooring tiles, playground surfaces, and modified bitumen for roads.</p><p>Industry bodies such as AIRTRA (All India Rubber and Tyre Recyclers Association) and MRAI (Material Recycling Association of India) play a critical role in advocacy, standard-setting, and capacity building.

NITI Aayog has been tracking recycling capacity growth, noting the 2.68 million metric tonnes processed in 2024-2025 as a benchmark metric. The downstream supply chain originates from local automotive service centres, transport fleets, and scrap yards, with decentralized micro-collectors and scrap dealers channeling tyres to regional aggregators, who in turn supply small-to-medium processing units. This layered distribution model creates economic opportunities at every node, from collection to final product sales.</p>

Project-specific demand drivers

• EPR mandates
• Brand sustainability commitments
• Plastic ban driving substitutes
• BIS green-product certification

<p>Small-scale tyre recycling in India relies on two principal technological pathways: mechanical grinding and thermal pyrolysis, each suited to different product profiles and investment capacities. Mechanical recycling employs ambient and cryogenic grinding techniques. In ambient grinding, tyres are first processed through primary shredders and granulators at room temperature, followed by classifiers that separate rubber crumb of 0.1 mm to 4 mm in size.

Cryogenic grinding enhances the process by using liquid nitrogen or air turbo-cooling systems to embrittle the rubber before grinding, yielding higher-purity crumb at finer particle sizes. Mechanical shredders, granulators, and magnetic separators constitute the core equipment, with machinery costs typically ranging from INR 25 lakh to INR 45 lakh for primary lines. Morfill India, located in Palghar, Maharashtra, operates an ISO 9001:2015 certified facility producing tyre pyrolysis plants and industrial shredders, exemplifying the domestic equipment manufacturing ecosystem.</p><p>Thermal recycling via pyrolysis is the dominant process within India's small-scale segment.

Batch-type pyrolysis reactors with capacities of 5 to 8 tonnes per day are priced between INR 35 lakh and INR 45 lakh, while 10 TPD units command between INR 42 lakh and INR 60 lakh. Entry-level ambient grinding and crumb rubber production lines are available at lower price points. Key domestic equipment suppliers include Divya International (Ahmedabad, established in 2007), Fabhind Private Limited (Ahmedabad), Shrivasa Industries Pvt.

Ltd. (Maharashtra, specializing in custom-engineered modular tyre recycling and pyrolysis units), Shree Ram Engineers, KGN Industries, and Proc Tech Machineries. These suppliers offer plant capacities ranging from 5 TPD to 12 TPD, covering the full spectrum of small-scale operational needs.</p><p>Technological trends point toward increased automation and modularity.

The global robotic tire recycling system market was valued at USD 1.47 billion in 2025, projected to reach USD 1.66 billion in 2026, while the global tire recycling equipment market stood at USD 1.42 billion in 2025 and is expected to reach USD 1.56 billion in 2026. Mechanical shredding holds approximately 42% of the technology market share. Decentralized, portable, and space-saving recycling units are gaining traction, enabling localized processing closer to waste generation points.

Small-scale operators should plan for a workforce comprising a plant manager, equipment operators, maintenance technicians, quality control specialists, and sales and marketing staff, with core machinery skill requirements including a high school diploma or equivalent, mechanical aptitude, and proficiency in conveyor and baler systems.</p>

For the ₹5-7 crore CapEx band, KAMRIT recommends 70:30 debt-equity structure with term loan from SIDBI (MSME green financing window at 7.5-8.5% interest) or IREDA (RE financing at 6.5-7.5% for eligible machinery). Private sector banks including HDFC Bank and Axis Bank offer green loans at 8.5-9.5% with 7-year tenure. PMEGP subsidy of up to 35% of project cost (for general category) reduces equity requirement to ₹1.5-2 crore on a ₹5 crore project; CGTMSE credit guarantee cover enables collateral-free borrowing from consortium lenders. State MSME incentive schemes in Gujarat (SITP), Maharashtra (Mahaudaan), and Tamil Nadu (TANSI) offer land conversion rebates and electricity duty exemption for 5-7 years. Working capital cycle: 45-60 days for ELT procurement (advance payment to collectors), 15-20 days production, 30-45 days receivables from construction companies and cement kilns. Bank'sDsCR comfort zone at 1.4x for first two years, improving to 1.6x from year 3 as pyrolysis oil contracts stabilize. Insurance coverage (fire, transit, product liability) for hazardous waste processing operations: approximately 1.2% of asset value per annum. GST input credit optimization on machinery (28% slab) against pyrolysis oil output (12% slab) requires careful ITC matching to avoid cash flow compression.

<p>Despite the compelling opportunity, small-scale tyre recycling in India faces a complex web of risks that operators must carefully manage. Regulatory compliance constitutes the most immediate operational risk. The EPR mandates under the Hazardous and Other Wastes (Management and Transboundary Movement) Amendment Rules, 2022 require registered recyclers to meet mandatory recycling quotas, and failure to comply can result in registration cancellation, penalties, or exclusion from the producer network.

Obtaining and maintaining CTE, CTO, and hazardous waste authorizations involves navigating bureaucratic processes at both central and state levels, with variations across state pollution control boards adding administrative complexity. The 5% GST on scrap input versus 18% GST on finished recycled products creates a significant tax differential that compresses margins unless properly managed through input tax credit mechanisms.</p><p>Financial and operational risks are substantial. The capital requirement for a small-scale plant ranges from INR 38 lakhs to INR 1.5 crore, representing a significant commitment for micro-entrepreneurs.

Operational costs are heavily influenced by energy prices, with pyrolysis plants being particularly energy-intensive. Profitability depends critically on balancing low-cost raw material sourcing against these high-energy operational costs. Feedstock supply chain disruptions pose another risk: while scrap tyres are theoretically abundant, informal sector competition, seasonal variations in vehicle usage, and logistics bottlenecks can affect consistent supply.

The small-scale segment also faces pricing volatility in downstream product markets, as crumb rubber and pyrolysis oil prices fluctuate with crude oil and virgin rubber prices.</p><p>Environmental and reputational risks cannot be understated. Pyrolysis operations, if not properly managed, can generate air emissions, liquid effluents, and solid residues that trigger regulatory action. The sector's historical association with unregulated and polluting informal units creates reputational headwinds that formal operators must overcome through transparency and compliance.

Safety risks, including fire hazards associated with tyre stockpiles and pyrolysis facilities, require rigorous operational protocols. Market risks include the potential for regulatory changes affecting EPR targets, GST rates, or import duties on tyre scrap, which could alter the economic calculus. Competition from approximately 800 existing units, including both formal registered recyclers and informal operators with lower overhead structures, adds pricing pressure.

Finally, the relatively low formal recycling rate of 10% to 15% signals that market education and buyer awareness of certified recycled products remain underdeveloped, requiring sustained investment in market development by new entrants.</p>