29-August-2024-Editorial

NATURAL RUBBER SHORTAGE IN INDIA

India is currently grappling with a significant shortage of natural rubber (NR), with domestic production falling short of demand by around 550,000 tonnes.

Despite efforts to increase production, the gap between supply and consumption continues to widen, impacting various industries and contributing to higher import dependency.

Causes of Natural Rubber Shortage in India

Demand-Supply Discrepancy

• Production vs. Consumption: NR production has risen from 839,000 tonnes in 2022-23 to 857,000 tonnes in 2023-24. However, consumption has increased from 1.35 million tonnes to 1.416 million tonnes during the same period.
• Sectoral Use: Approximately 70% of NR is used by the tyre industry, while the remaining 30% is consumed by non-tyre sectors, particularly small and micro enterprises, which face significant challenges.

High Import Reliance

• Import Sources: India has traditionally relied on imports to meet local NR demand, sourcing from countries like Vietnam and Indonesia.
• Import Duties: The customs duty on NR imports is set at 25% or Rs 30 per kg, whichever is higher. Additionally, latex rubber used in gloves and balloons faces a total duty of 75%, creating an inverted duty structure where the tax on inputs is higher than on finished products.

Geopolitical Issues

• Global Supply Disruptions: China’s stockpiling of NR and political instability in Bangladesh, a previously reliable supplier, have disrupted the NR supply chain to India.

Impact of Monsoon

• Tapping Activities: Heavy monsoon rains have reduced NR tapping activities, affecting supply availability, particularly for industries dependent on NR.

Key Facts About Rubber

Overview

• Nature of Rubber: Rubber is an elastic material that returns to its original shape after deformation. It can be natural or synthetic and consists of polymers derived from isoprene and other organic compounds.

Types of Rubber

• Natural Rubber: Obtained from latex, a milky fluid from certain plants, and is crucial for various applications.
• Synthetic Rubber: Produced chemically, it is an alternative to natural rubber.

Production and Consumption

• India’s Position: India is the third-largest producer and the fourth-largest consumer of natural rubber globally. Kerala is the leading producer, followed by Tripura.

Trade Scenario

• Exports: In 2022-23, India exported 3,700 tonnes of NR. Major markets include the USA, Germany, UAE, UK, and Bangladesh.
• Imports: India imported 528,677 tonnes of NR in the same period, primarily from Indonesia, Thailand, China, South Korea, and Japan.

Factors Influencing Rubber Growth

• Climate: Rubber trees thrive in tropical climates with temperatures between 20°C and 35°C.
• Soil Conditions: Ideal for rubber cultivation are loamy or laterite soils with good drainage.
• Rainfall: Rubber cultivation requires more than 200 cm of annual rainfall.
• Labour: Availability of skilled and cost-effective labor is essential for rubber plantations.

Government Initiatives to Boost Rubber Production

• Sustainable and Inclusive Development of Natural Rubber Sector (SIDNRS): This scheme aims to enhance the rubber sector’s development through financial and technical support.
• Rubber Plantation Development Scheme: To encourage new rubber plantations and support existing ones.
• Rubber Group Planting Scheme: Provides assistance for collective rubber plantation efforts.
• Foreign Direct Investment (FDI): 100% FDI is permitted in rubber plantations to attract investment.
• National Rubber Policy 2019: Developed by the Ministry of Commerce & Industry, it outlines strategies for addressing issues in rubber cultivation, processing, marketing, and more. The Rubber Board oversees this policy’s implementation, including support for planting, research, and skill development.

Strategies to Enhance Rubber Production

• Policy Expansion: Enhance subsidies and financial aid for new and replanting rubber projects.
• Skill Development: Improve cultivation techniques through better training and skill development initiatives.
• Research Investment: Boost funding for research on high-yield and disease-resistant rubber varieties.
• Collaborative Projects: Encourage collaboration between the government and private sector for investment in rubber plantations and processing infrastructure.

Conclusion

India’s rubber industry plays a crucial role in the economy but faces a persistent shortage that leads to increased imports and higher costs. To address this challenge, enhancing domestic production through supportive policies, research, and training is essential. By focusing on these areas, India can reduce its dependency on imports and better meet the growing demand for natural rubber.