Sharp fall in domestic Natural Rubber (NR) production leading to widening gap between domestic demand and supply has left India’s Tyre Industry worried. In a communication to Ministry of Commerce, Government of India, Automotive Tyre Manufacturers Association (ATMA) has asked for easing the availability of NR for consuming interests.
Natural Rubber (NR) consumption in India touched a figure of 12.1 lakh tonnes in FY 2018-19 while production stood at 6.4 lakh tonnes during the same period leading to a gap of nearly 50%.
NR production in the recent years has witnessed a continuous and steep decline whereas the consumption of NR continues to witness a steady growth. Such a scenario has led to an imbalance between domestic NR demand & supply, and the gap (between domestic NR Consumption-Production) has not only widened in recent years but expected to continue in the foreseeable future as well
For the first time, the NR consumption in India has crossed the mark of 12 lakh tonnes in a financial year recording an average monthly consumption of more than 1 lakh tonnes. The commitment of Tyre Industry to increase production footprint in the country needs to be supported by increasing the supply of raw materials otherwise it will leave domestic manufacturing uncompetitive.
According to ATMA, imports of NR are imperative for tyre plants to run. However the policy environment is highly restrictive. Custom Duty (on NR Imports) is at 25%, much higher than the rate of duty levied by any other NR importing country.
ATMA has expressed concern over the possibility of treating NR as an agricultural product in the new Natural Rubber Policy stating that Natural Rubber is a strategic industrial raw material and hence calls for NR security of the country.
ATMA has also objected to terming the NR imports as “unwarranted” stating that imports are NOT ‘unwarranted’ but “essential” as the NR consuming sectors have no other option but to import the required quantity of NR to bridge the domestic deficit. NR imports are in sync with the domestic gap and hence are essential. The export of NR from India is insignificant which clearly indicates that nearly the entire domestic production is fully consumed within the country and NR import is important to meet further demand.
India is the second largest consumer of NR in the world after China. The share of NR in the overall Raw Material (RM) consumption of Tyre Industry is more than 40%. Tyre Industry’s consumes approx. 70% of total NR consumption in the country (reflects its high significance of mobility, whether for defence, State Transport Undertakings, movement of food-grains and other essential items by trucks across the country or for personal transportation by various means of transportation).