Falling rubber output, rising consumption increase imports

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The production-consumption gap widens in the first quarter of FY19 to 58% against 46% in Q1FY18

With the date of the fourth edition of India Rubber Meet (IRM-2018) to be held in Kochi drawing closer, the issue that is haunting the rubber sector and all stakeholders is the widening gap between output and consumption. Suresh Prabhu, minister for commerce and industry, will inaugurate IRM-2018, organised by the Rubber Board and stakeholder associations in rubber and allied sectors, on August 30.

The theme of the two-day IRM is “Towards a sustainable rubber value chain” and the discussions would focus on scenario, trends, challenges and strategic planning for sustainability and advancement of the sector.

In the first quarter of 2018-19, production of natural rubber has hit a six-year low of 126,000 tonnes and consumption reached a peak of 302,000 tonnes. The production-consumption gap has widened to 58 per cent from 46 per cent in the year-ago period.

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Production of natural rubber in India dropped to 694,000 tonnes in 2017-18 from 774,000 tonnes in 2013-14, according to minister of state for commerce and industry Chaudhary. He was replying to a question in the Lok Sabha last week. The decline in output has to be seen in the light of the fact that consumption of natural rubber has gone up from 981,000 tonnes in 2013-14 to 1.11 million tonnes in 2017-18.

This explains the fact that India’s natural rubber imports increased from 360,000 tonnes in 2013-14 to 469,000 tonnes in 2017-18. The production forecast for the current year has been adjusted and brought down accordingly. The natural rubber production forecast for 2017-18 was 800,000 tonnes. The production forecast for 2018-19 is 730,000 tonnes, which is 70,000 tonnes lower than 2017-18.

These projections are made on the basis of matured rubber area under tapping, productivity and production trend during the recent past, which are determined mainly by prices of rubber.

The latest statistics from the Rubber Board of India suggests that natural rubber production contracted by 12 per cent, while consumption moved up by 14 per cent. The deficit stood at 176,000 tonnes in the first three months of ongoing financial year against 121,000 tonnes a year ago.

For second consecutive month in , natural rubber consumption breached the 100,000-tonnes mark. The production on the other hand has remained below 45,000 tonnes in each of the first three months, the Rubber Board data points out.

The India Rubber Expo (IRE), being organised by the All India Association (AIRIA), will take place soon after the IRM-2018. is Asia’s largest rubber exhibition and one of the most eagerly awaited events in the region. Other than being a valuable platform for growth, idea exchange and collaboration, the event provides a unique opportunity for Indian companies to meet under one roof, showcase new technologies, share information, plan growth strategies and network with overseas companies. The highlight of the show will be exclusive country pavilions being set up by , South , and Europe.

While import of natural rubber is imperative to meet the huge demand-supply gap, custom duty stands at 25 per cent, which is higher than other rubber importing countries. Besides, the export obligation period for tyre export, set as a pre-condition for import of natural rubber, has been reduced to 6 months from 18 months, making it further tough for the tyre industry. The tyre industry, on its part, is lobbying for import of natural rubber on the tariff rate quota basis at zero rate of duty to the extent of gap between domestic production and consumption.

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