India’s output of natural rubber (NR) dropped to a six-year low of 1.26 lakh tonnes in the first quarter of 2018/19, with consumption at a high of 3.02 lakh tonnes.
The production-consumption gap widened to 58% of consumption in Q1 of current financial year from 46% in the year-ago period making the raw material scenario all the more worrisome, according to the Automotive Tyre Manufacturers Association (Atma).
According to the latest figures released by Rubber Board of India, NR production contracted by 12%, while consumption went up by 14%. The deficit was 1.76 lakh tonnes in the first three months of the ongoing fiscal year against 1.21 lakh tonnes a year ago.
For the second consecutive month in June, NR consumption breached the one lakh-metric tonne mark. The production, on the other hand, has remained below 45,000 tonnes in each of the first three months, says the Rubber Board.
“Domestic natural rubber production could meet only 42% of the domestic demand in the first quarter of the current fiscal year. Such scarcity and grossly inadequate availability of domestic NR is leading the tyre industry to a precarious position. The dependence on expensive imports will need to go up significantly if tyre manufacturing operations are to be sustained in the country,” Rajiv Budhraja, Director-General of Atma has been quoted as having said.
Imports of NR are imperative to meet the huge demand-supply gap. However, the customs duty on NR imports is a steep 25%, higher than what is imposed by other countries that import NR. This will be a burden to tyre makers, says Atma.