Commodities

Tyre industry voices concern over domestic availability of natural rubber

V Sajeev Kumar Kochi | Updated on August 16, 2021

ATMA urges govt to allow duty-free import of natural rubber

With economic recovery back on track and the automobile industry witnessing increased traction, there is a surge in demand for tyres. However, a squeeze in domestic availability of natural rubber — the key raw material — has become a major deterrent for the tyre industry to support domestic manufacturing, Automotive Tyre Manufacturers Association (ATMA) has stated in a communication to the Rubber Board.

Tyre industry accounts for over 70 per cent of natural rubber consumed in the country.

“As such, the tyre industry has been experiencing tightness in domestic availability of natural rubber during the current fiscal. However in the second quarter a severe crunch is being witnessed while the NR prices are shooting up. The paucity of NR needs to be addressed at the earliest so that tyre production processes are not disrupted,” said Rajiv Budhraja, Director-General, ATMA.

The Rubber Board had projected much higher production figures for the current fiscal in view of rain-guarding and other measures. However, according to ATMA, the ground realities are not in line with the Board’s guidance as market arrivals of sheet rubber have trickled down. During the first quarter of the current financial year, domestic production could fulfil only 42 per cent of the total requirement.

Offtake may rise

According to provisional figures, against a consumption of 3.01 lakh tonnes, NR production stood at 1.27 lakh tonnes in the Q1 of FY22.

Going forward, NR consumption is expected to inch up further and the industry expects the annual demand to cross 13 lakh tonnes this fiscal. With the production of 7,90,000 tonnes as projected (in normal scenario) by the Rubber Board, NR imports of at least 5 lakh tonnes are a must.

It is learnt that growers have shifted to latex production at the cost of sheet rubber given the firm demand and prices for latex in the domestic market. It is also suspected that NR producing interests or trade is withholding the sheet rubber in anticipation of a price increase, ATMA said.

Consuming industries have no option but to increase import of NR to bridge the deficit. In fact, some of its members are planning to go for import to overcome the ongoing logistics/container challenges, ATMA has stated.

While NR imports are imperative to bridge the huge deficit and for tyre plants to run, the policy environment is highly restrictive. There are port restrictions on rubber imports which are allowed to be imported only from two ports — Chennai and JNPT — adding to the costs and delays.

ATMA has urged the government to remove restrictions on import of NR urgently and allow duty-free import to the extent of domestic deficit since imports have not shown to put any adverse impact on domestic prices that have been ruling higher than international prices for a long time.

Published on August 16, 2021

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