Allow more duty-free imports of NR to meet demand

Written by Sandip Das | Updated: May 2 2012, 02:55am hrs
With the demand for natural rubber (NR) rising steadily against the production, the rubber industry is actively collaborating with the Rubber Board to increase NR production and on other issues concerning quality of production. More than 60% of natural rubber in India is consumed by the tyre sector. Neeraj Kanwar, chairman, Automotive Tyre Manufacturers Association (ATMA), spoke to FEs Sandip Das on a range of issues concerning the industry:

What is your view on the sharp hike in NR imports during the last financial year

Primarily its due to consumption of natural rubber overshooting production. Most of the import has taken place to cater to the high-end quality NR requirements for manufacturing truck and bus radial tyres. For these radials, at least RSS 4 grade sheet rubber is required to meet exacting requirements, and domestic availability unfortunately lags behind. With new road infrastructure and better quality multi-axle vehicles, the demand for radial truck and bus tyres is growing fast. In the current year itself, it is likely to go up by almost 100% to five million tyres. The ratio of radial tyres will further go up in the coming years. This further highlights the urgency of increasing the quality of indigenously produced rubber.

Since the consumption of rubber has overtaken production in India, how do you plan to meet the challenge of rubber deficiency

India has become the second-largest consumer of natural rubber after China, overtaking the US and Japan. All projections point to further widening of the gap between production and consumption in India. However, with productivity being the highest in India in traditional rubber growing regions, we are working with the Rubber Board to increase the production by tapping into non-traditional rubber-growing areas in the North East. It needs to be appreciated that rubber has a long gestation period. A rubber tree takes seven years before it starts oozing latex. So, increase in production through new plantations can only be a long-term strategy. In the near term, we have asked the government for duty-free import of rubber to the extent of its domestic deficiency. Heeding to industry plea, the government did allow a limited quantity of rubber to be imported duty-free during the last fiscal, but the quantity needs to be enhanced.

What about acquiring plantations abroad to meet domestic requirements

In the medium term, we are working with the government to follow the China example in securing availability. Aided by their government, Chinese companies are buying plantations in key natural rubber- growing countries to ensure sustained supply of NR.

We have also sent representations to the government for establishing a public private partnership (PPP) organisation to explore international opportunities. On their own, some of the leading Indian tyre companies have gone ahead and invested in plantations abroad.

What is your view on the Rubber Boards campaign for production of quality natural rubber

India ranks number one in natural rubber productivity in the world, but quality leaves immense scope for improvement. Rubber consuming industries, particularly the tyre industry, is gearing for a generational change. The industry has lined up huge investments in cutting-edge technologies for production of state-of-the-art radials for the truck and bus segment.

However, to optimise performance, the quality of raw material in particular rubber is critical. Tyre is a raw material-intensive industry. Raw materials account for 70% of the production cost for the industry. Of this, natural rubber accounts for almost 50% of the raw material cost. In the absence of good quality rubber, it is impossible to manufacture world-class tyres. It is gratifying to note that the Rubber Board has appreciated the challenge faced by the industry and is leading the charge in improving the quality.