India is facing acute shortage of natural rubber

Chennai, India – India is facing an acute shortage of natural rubber (NR) with domestic production falling short of demand by around 5.5 lakh ton.

All India Rubber Industries Association (AIRIA) reports natural rubber production in India has increased from 8.39 lakh ton in 2022-23 to 8.57 lakh ton in 2023-24. “But there has also been a sharp rise in NR consumption which has gone from 13.5 lakh ton in 2022-23 to 14.16 lakh ton, now so the deficit is still 5.5 lakh ton,” Shashi Singh, president of AIRIA said.

The immediate result is a sharp increase in the price of NR. “The price is currently at Rs 247 per kg which is the highest in 15 years compared to Rs 182 per kg as on April 1, 2024. So in four months, it has nearly doubled,” he said.

India, he added, has always been dependent on imports because domestic production of NR has not kept pace with demand. “NR imports face a 25% customs duty or Rs 30 per kg whichever is higher but that’s just one part of the issue,” said Singh. The other is the availability of NR. “Right now, China is stocking up and Bangladesh, which had become a good source of NR, is in turmoil,” added.

Currently around 70% of the NR is consumed by the tire industry. But the balance 30% comprises non-tire companies which are mostly small and micro enterprises.

“Take latex rubber used for making gloves and balloons which has a total 75% duty,” said Singh. “There is a shortage of this raw material but imported mattresses, balloons or surgical gloves attract a much lower duty of just 10% which encourages the import of these products rather than local manufacturing,” he said.

AIRIA and Automotive Tyre Manufacturers Assocation (ATMA) have already approached the government with a joint statement on this input crisis.

The government has been expanding its local NR production. “Earlier it was Kerala only but now Tripura is the second largest producer,” said Singh.