Economic Challenger - - CONTENTS - - Dr. Anil Ku­mar


Nat­u­ral rub­ber is one of the most im­por­tant agro-based in­dus­trial raw ma­te­ri­als in the world. Global nat­u­ral rub­ber out­put is es­ti­mated to be around 8.6 mil­lion tons with Thai­land, In­done­sia, Malaysia and In­dia lead­ing the pack. China, US, Ja­pan and In­dia are the lead­ing con­sumers of nat­u­ral rub­ber. Global nat­u­ral rub­ber out­put is slightly lower than con­sump­tion and that has helped rub­ber prices to touch high lev­els dur­ing 2010 and 2011. De­spite be­ing the fourth largest pro­ducer of nat­u­ral rub­ber in the world, In­dia is yet to achieve the sta­tus of a ma­jor rub­ber-ex­port­ing coun­try.


In­dia is the third largest pro­ducer of nat­u­ral rub­ber and the fourth largest con­sumer of nat­u­ral rub­ber in the world. It also stands fifth in the con­sump­tion of nat­u­ral rub­ber and syn­thetic rub­ber to­gether in the world. This in­dus­try has tremen­dous chances of growth, which in turn can lead to ex­po­nen­tial growth in ex­port op­por­tu­ni­ties. The thrust area un­der­lined in this pa­per is about the ex­port op­por­tu­ni­ties, the re­cent trends in rub­ber in­dus­try, In­dia's po­si­tion in rub­ber sec­tor and the em­ploy­ment op­por­tu­ni­ties in In­dian rub­ber in­dus­try.


In­dia is the third largest pro­ducer of rub­ber in the world con­sis­tent at the rate of 6% per an­num. In­dia pro­duces around 800,000 tones of rub­ber. Firm­ing up in global level has helped nat­u­ral rub­ber prices to gain over 20 per­cent to Ru­pees 6,699 per 100 kg in 2010-11 (Apr-Mar) com­pared with the same pe­riod a year ago. Ker­ala con­trib­utes 90% of In­dia's to­tal pro­duc­tion of nat­u­ral rub­ber. Ker­ala and Tamil Nadu to­gether oc­cupy 86% of the grow­ing area of nat­u­ral rub­ber. In the tra­di­tional form it is cul­ti­vated in Kanyaku­mari in Tamil­nadu and Ker­ala and in the non-tra­di­tional ar­eas it is cul­ti­vated in the coastal re­gions of Kar­nataka, Goa, Andhra Pradesh, Orissa, Ma­ha­ras­tra, Tripura, An­daman and Ni­co­bar Is­lands.


Tyre mak­ers are the main con­sumers of nat­u­ral rub­ber in In­dia and con­sume nearly 60 per­cent and the rest by non-tyre sec­tor. The per capita con­sump­tion of rub­ber in In­dia is only 800 grams com­pared to 12 to 14 ki­los in Ja­pan, USA and Europe. So far as con­sump­tion of rub­ber prod­ucts is con­cerned, In­dia is far from at­tain­ing any sat­u­ra­tion level. This is an­other fac­tor lead­ing to tremen­dous growth prospects of the in­dus­try.

The wide range of rub­ber prod­ucts man­u­fac­tured by the In­dian rub­ber in­dus­try are; Auto tyres, Auto tubes, au­to­mo­bile parts, footwear, belt­ing, hoses, cy­cle tyres and tubes, ca­bles and wires, camel­back, bat­tery boxes, la­tex prod­ucts, phar­ma­ceu­ti­cal goods and also hi-tech in­dus­trial items. The im­por­tant ar­eas which the in­dus­try caters to in­cludes; All the three wings of de­fence; Civil,

Avi­a­tion, Aero­nau­tics., Rail­ways and agri­cul­ture trans­port, Tex­tile, en­gi­neer­ing in­dus­tries, Phar­ma­ceu­ti­cals, mines, steel plants. The de­tailed note on the con­sump­tion of nat­u­ral rub­ber is given be­low;


The In­dian rub­ber in­dus­try has a turnover of Rs. 12000 crores. The ex­ports of In­dian nat­u­ral rub­ber have in­creased tremen­dously over the years and have reached 76000 ton in 2008-09 but an­nu­ally In­dia is im­port­ing around 50000 tons of rub­ber.

There are about 6000 unit com­pris­ing 30 large scale, 300 medium scale and around 5600 small scale and tiny sec­tor units. Th­ese unit are man­u­fac­tur­ing more than 35000 rub­ber prod­ucts, em­ploy­ing 400 thou­sand peo­ple, which also in­cludes 22000 tech­ni­cally qual­i­fied sup­port per­son­nel, con­tribut­ing Rs. 40 bil­lions to the Na­tional Ex­che­quer through taxes, du­ties and other levies. The in­dus­try has cer­tain dis­tinct

ad­van­tages like: In­dige­nous avail­abil­ity of the ba­sic raw ma­te­ri­als like nat­u­ral rub­ber, syn­thetic rub­ber, re­claim rub­ber, car­bon black, rub­ber chem­i­cals, fatty acids, rayon and ny­lon yarn and so on, a large domestic mar­ket, avail­abil­ity of cheap labour, train­ing fa­cil­ity in var­i­ous tech­ni­cal in­sti­tutes, on-go­ing eco­nomic re­forms, im­proved liv­ing stan­dards of the rub­ber cul­ti­va­tors.


The In­dian rub­ber in­dus­try im­ports nat­u­ral rub­ber un­der the ad­vance li­cense scheme in lieu of ex­ports. The Government has been low­er­ing the im­port duty of nat­u­ral rub­ber and some times there will not be any duty when the WTO stip­u­la­tions come into full force which would cause flood­ing in the domestic mar­ket and this would be detri­men­tal to the one mil­lion rub­ber grow­ers.

The Ker­ala State Co-op­er­a­tive Rub­ber Mar­ket­ing Fed­er­a­tion has pleaded for the con­tin­u­ance of ex­port sub­sidy to nat­u­ral rub­ber to sus­tain the grow­ers and to bring sta­bil­ity in the domestic mar­ket. The recog­ni­tion of In­dia as a re­li­able source of nat­u­ral rub­ber in in­ter­na­tional mar­ket would pro­pel it to a po­si­tion where it could con­trol the prices. Now the In­dian rub­ber is fetch­ing $50 less than the in­ter­na­tional price of ex­ports. The ex­port of nat­u­ral rub­ber is not detri­men­tal to the in­ter­ests of the con­sum­ing in­dus­try, as ex­port is vi­able only if in­ter­na­tional mar­ket prices are higher than the domestic prices in spite of the ex­port in­cen­tive.

The Government of­fered the sub­sidy, with a goal to ex­port one lakh tones of rub­ber dur­ing the 11th Five Year plan, How­ever, ex­ports crossed 1.30 lakh tone in just two years. The dif­fer­ence of Rs 5-7 per kg be­tween the In­dian and in­ter­na­tional prices cou­pled with the ex­port sub­si­dies en­thused ex­porters to get ac­tive in the mar­ket. In­dia ex­ports to over 85 coun­tries, in­clud­ing USA, Ger­many, France, U.K, Italy,UAE, Saudi Arabia, Africa, Afghanistan, Bangladesh.”


Rub­ber in­dus­try is ex­pected to grow at over 8% p.a. in the coming decade. The in­dus­try en­vis­ages an an­nual growth rate of 8% and the per capita con­sump­tion of rub­ber at 0.8 kg. against 14 kg. There ex­ists tremen­dous scope for ex­pan­sion and devel­op­ment in coming years pro­vided ba­sic raw ma­te­ri­als, par­tic­u­larly nat­u­ral and syn­thetic rub­ber, are made avail­able in ad­e­quate quan­tity and at rea­son­able prices. Asia is now the fo­cus of growth in the rub­ber in­dus­try. World's nat­u­ral rub­ber is grown in Thai­land, In­done­sia, In­dia, Malaysia, Sri Lanka etc.

The largest in­vest­ments in new syn­thetic rub­ber plants are coming up in Asia. Pro­duc­tion of all auto ma­jors is shift­ing to Asia, even as con­sump­tion-wise Asia's share in the world's auto mar­ket grows. High­est growth and avail­abil­ity of tech­ni­cally trained man­power for the rub­ber in­dus­try is in this re­gion. While EU and US have now be­come a sat­u­rated mar­ket for the rub­ber in­dus­try all the ac­tion is shift­ing to Asia. Low de­mand growth for end prod­ucts, high labour costs, very strict en­vi­ron­men­tal norms, non avail­abil­ity of nat­u­ral rub­ber in the back­yard are all pro­pel­ling the worlds ma­jor in­put sup­pli­ers for the rub­ber in­dus­try to look to­wards Asia.


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