The Hindu Business Line : Rubber shortage forces tyre cos to import more

FACED with a severe shortage of natural rubber in the domestic market, tyre manufacturers have decided to go in for more imports in the coming months to tide over the crisis.

Tyre companies now propose to import 35,000 tonnes of rubber by this September as against earlier plans to import 26,500 tonnes during the April-August period, industry sources said.

"We have dangerous stock levels. ... There is no way but to increase our imports," they said. For this fiscal, tyre makers will import 60,000 tonnes of rubber, a 39 per cent jump over the 43,154 tonnes imported last year.

The stock of about 66,000 tonnes at the end of May is the lowest in nine years. "This is not even one month's consumption for the industry," the sources said. Tyre companies consume more than half the total rubber produced in the country.

One of the main reasons for the current rubber shortage in the domestic market is the early monsoon that hampers tapping in Kerala, which accounts for over 90 per cent of the country's natural rubber production. Increased rubber exports — India's rubber exports rose 37 per cent to 75,905 tonnes last year — have also led to shrinking of stocks, according to tyre makers and other consumers.

Companies can import natural rubber duty-free to produce tyres for exports. In 2003-04, India exported tyres worth Rs 1,250 crore, and it is expected to go up to Rs 1,400 crore in the current year.

The prevailing high domestic price of rubber is another reason prompting companies to increase imports. While the RSS-4 grade is traded a shade above Rs 65 in Kottayam, it was priced at Rs 63 in Bangkok on Friday.

Given the current prices and local taxes of about 15 per cent, importing rubber duty-free will at least be cheaper by Rs 5 compared to buying from the domestic market, the sources said.

The industry is also of the view that rubber production in the current year may not rise as much as the projected 6.1 per cent.

In 2003-04, production surged 9.6 per cent to 7.11 lakh tonnes, and to replicate such high growth in the very next year could be difficult since there will not be any notable increase either in the yield or area for cultivation.

As against this, tyre production is slated to rise by 10 per cent in 2004-05.

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