Rubber sector to rely on inherent strengths

Joseph Vackayil in Chennai

Rubber growers now face the threat of losing their monopoly in the domestic market under the liberalised world trade regime. The Indian rubber market has thrown open imports without any quantitative restrictions. The bound rate of duty is only 25 per cent. The Government cannot increase it but can only decrease it over the years. For some other commodities the bound rate is up 300 per cent.

The growers have to rely on their inherent strengths and rise up to the global trading standards to survive. They have the world’s highest productivity levels and lowest wage rates. The Indian rubber sector has these factors to its advantage to enter the world market.
However the odds are many. India is yet to make a significant presence in the Asia-dominated international rubber market. Five Asian countries, Thailand, Indonesia, Malaysia, Vietnam and India are the major rubber producing countries in the world.

According to the data available from ‘The Planters’ Chronicle’, Thailand accounts for 33.5 per cent of the world production of 67.60 million tonnes and 40.9 per cent of the 46.10 million tonnes of rubber exports globally. It is followed by Indonesia which has 23.6 per cent share in production and 32.4 per cent in exports. Malaysia has 11.4 per cent share in production and 9.5 per cent in exports. Vietnam is a small player with around 230 lakh tonnes of production. It has 3.4 per cent share in production and 5 per cent in exports. India has 9.7 per cent share in production and very negligible exports.

The four major exporters account for 88 per cent of exports and 72 per cent of production of natural rubber in the world. India has to compete with these global players. Vietnam exports almost its entire production, Indonesia exports 93 per cent and Malaysia 57 per cent.

Indian producers are far behind them in attaining the global standards in quality, packaging and labelling and trading system.

In a special study on natural rubber in the context of WTO, Mr Jom Jacob from the Statistics and Planning Department of Rubber Board, Kottayam, says ‘‘Trading of natural rubber in the international market is mainly done under the futures system through the exchanges in Kuala Lumpur, Singapore and Tokyo. This international trading system is still unfamiliar to the Indian natural rubber production sector’’.

It is possible to attain still higher productivity. Member growers of the Rubber Board-sponsored Rubber Producers’ Society (RPS) have exceeded the national average and attained a productivity of 2,500 kg a hectare. RPS offers tremendous scope to tackle the problems posed by the tiny size of rubber holdings in India, less than half a hectare.

An apparently pleased rubber consuming industry, especially the tyre manufacturers, have said that they are not under any moral obligation to help domestic growers and the tyre companies would import rubber under open general licence. The tyre companies have a major say in deciding the prices of natural rubber. Their indifference to the over a million rubber growers would be disastrous to the community. The average price of rubber which was Rs 48 a kg in 1996, declined to Rs 37 in 1997 and further down to Rs 27-28 in 1998.