Natural rubber imports into India may cross $1,100 million mark by end of this fiscal: Study

Gap between production-consumption of natural rubber growing at 69% CAGR

Growing at a compounded annual growth rate (CAGR) of about 32 per cent, import of natural rubber in India in value terms is likely to touch $1,107 million (mn) by the end of the ongoing fiscal year (FY) 2014-15 as the country had imported natural rubber worth about $734 mn during first nine months of FY 2013-14, apex industry body ASSOCHAM said.

Imports of natural rubber in India have grown from over 81,500 metric tonnes (MT) to over 2.1 lakh MT during 2008-09 and 2012-13 thereby clocking a CAGR of about 28 per cent, according to a study titled 'Widening Gap between demand-supply of natural rubber in India,' conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Indonesia alone accounts for about 42 per cent of India's total natural rubber imports followed by Thailand and Vietnam that account for about 26 per cent and 24 per cent share in natural rubber imports into the country, noted the study prepared by the ASSOCHAM Economic Research Bureau (AERB).

The most worrying factor is the ever-widening gap between production and consumption of natural rubber in India which is growing at a CAGR of whopping 69 per cent as it crossed 59,000 MT mark in FY 2012-13 as against about 7,200 MT in 2008-09, said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the chamber's study.

The demand-supply gap is further expected to increase by about 20 per cent while taking into account the expected growth of automobile, footwear and other sectors consuming natural rubber, said Mr Rawat. It is imperative for India to immediately address the issue of rising natural rubber imports by augmenting domestic production of natural rubber.

Increase in domestic prices due to shortage of domestically available natural rubber during the peak season owing to fall in production is a point of concern for downstream industries as natural rubber is the main raw material for them, noted the ASSOCHAM study. In such a situation, the industry has no option but to look at alternative sources of raw material from abroad as international prices might be lower than domestic ones.

In its study, ASSOCHAM has listed certain significant measures like - correcting the inverted duty structure, offering government-owned waste lands for rubber plantation on a long-term lease, ensuring easier availability of finance, increased government policy support and institutional interventions, promotion of farmer-producer societies functioning as self-help groups and empowering farmers economically to bolster natural rubber production and gradually reduce the growing reliance on its imports.

Besides, in order to serve the interest of producers in a better way, it is necessary to effectively utilize the Price Stabilization Fund Scheme, the study added.

October-January is the peak season for rubber harvesting in India. While about five lakh people are engaged in rubber production in the country. As of FY 2012-13 the total rubber production (including both natural and synthetic) stood at over 10 lakh metric tonnes which included 9.13 lakh metric tonnes of natural rubber and the remaining comprised of synthetic variety.

While total rubber consumption (both natural and synthetic rubber) in India stood at 14 lakh metric tonnes in 2012-13 with natural rubber comprising a share of about 69 per cent and synthetic rubber comprised 31.3 per cent share.

Maharashtra has highest share of over 16 per cent in total rubber product factories in India closely followed by Tamil Nadu (15 per cent) and Kerala (13 per cent). While Tamil Nadu employs most number of people (36,000) engaged in manufacturing rubber products followed by Maharashtra (15 per cent) and Andhra Pradesh (9 per cent).

Powered by Capital Market - Live News