London - The Indian rubber manufacturing sector has an annual turnover of close to $5 billion (E5.6bn), figures from the All India Rubber Industries Association (AIRIA) show. Exports, it says, make up around 23 percent of the trade, which overall has a 60/40 tire-to-non-tire ratio.
Automotive tire products account for more than 65 percent of the value of Indian rubber-product exports, with the US being the largest importer, the figures also show
At home though, while global per capita rubber consumption averages 3.2 Kg, China 8 Kgs and developed nations 14 Kgs, India weighs in at a mere 1.16 Kgs, notes AIRIA, which estimates Indian rubber consumption at around 1,765 kilotonnes per annum.
A new hub?
So, while India will “certainly” be a market for rubber-based products the future, will the country become be a rubber manufacturing hub? asked Mohinder Gupta in his president’s report at AIRIA’s annual meeting on 26 Sept in New Delhi.
To achieve this, Gupta called for more support from India’s government: improving infrastructure and the availability of quality power; helping with the costs of technology up-grades; and tackling skills shortages.
Of more direct concern is the increasing impact of non-tariff trading barriers on the sector’s export performance.
“The government needs to identify such barriers and resolve them to increase the un-competitiveness of Indian products in the ASEAN countries,” said the AIRIA president.
India’s law makers also need to better understand the needs of the Indian rubber industry, continued Gupta, noting that the government had slated 78 rubber products for free trade agreements – a list that may well increase in future.
This, noted Gupta, was happening just as rubber manufacturers are being severely impacted by recent hikes in duties on imports of natural rubber: “As manufacturers can import balloons at a duty of 10 percent, “the entire balloon industry in India has turned traders.”
Likewise, Gupta also noted that the Indian government had signed an FTA to import dehusking rollers at a nil rate of duty, versus an import duty of 10 percent on the rubber needed to manufacture them.
Separately, Apollo Tyres Ltd chairman Onkar Kanwar has called on the Indian government to stem the flow of cheap tire imports coming into the country – noting that truck-bus-radial (TBR) imports, mostly from China, had almost doubled in the three months to 30 Sept, compared to the same period last year.
“The problem of low-cost imports is putting at risk the entire ‘Make in India’ clarion call by the Indian government,” Kanwar said in a financial report issued 30 Oct.
Amid these growing challenges, the Indian rubber industry is awaiting a new National Rubber Policy (NRP), which is soon to be launched by the Indian government. The policy will seek to address the demands of the rubber industry and growers, at institutional and organisational levels, said Sachin Chandak, western region chairman of AIRIA, based in Mumbai.
The committee, he explained, is seeking to draw up a suitable regime for production, consumption, manufacture and import of rubber in the short and long term.
“The NRP with the interests of all stakeholders in its remit will be the single most decisive factor for igniting the growth of rubber sector which has immense potential,” Chandak commented in a written statement to ERJ.
The main reference point for both industry and policymakers is India’s fast-growing automotive market: the sector’s turnover is set to reach $145 billion by 2016 and it is on track to become the world’s third largest automotive market by 2018.
Automotive driver
The automotive sector is being driven partly by domestic economic growth: India’s GDP is estimated to be growing at 5.8 percent in the current financial year, with growth likely to reach 6.3 percent in the next financial year and 6.8 percent in 2016–17.
“With 65 percent rubber going into automotive applications … the future for the rubber industry is bright and we are looking at a 10-percent-plus growth rate in the medium term,” said Chandak.
Among other effects, this sector buoyancy has fuelled a domestic rush to produce more synthetic rubber. New projects by Reliance Industries (150 ktpa), a JV between Reliance and Sibur (100ktpa) and Indian Synthetic Rubber Ltd (120ktpa) could triple India’s SR capacity to 550ktpa, making the country self-sufficient in the material by 2017.
Meanwhile, the Automotive Tyre Manufacturers’ Association New Delhi has proposed a natural rubber quality-improvement initiative focused on model-grading and processing centres, to the Rubber Board – India.
“Making good quality NR, approved by the Rubber Board, available at home, will reduce dependence on imports for higher quality NR, as well as fostering a general improvement in standards across the supply-chain,” said Chandak.