Two years since the Covid-19 pandemic, the hard-hit rubber industry in India is yet to bounce back to normal. Speaking to The Indian Express, Shashikumar Singh, senior vice-president of the 75-year-old All India Rubber Industries Association that comprises over 1,400 companies, said that the industry needs government assistance to tide over the crisis. Saying the association has approached the Union ministries of finance and commerce for help, Singh spoke about the problems faced by the industry and the expectations from the government.
Q: What is the annual consumption of rubber, both synthetic and natural, in India? What would be the size of the rubber industry in the country and what percentage of the rubber used is imported?
Rubber products have a wide range of utilisation, from automobiles to medical devices. India’s captive consumption of natural rubber is 11 lakh tonnes per year, of which 4 lakh tonnes is imported. Similarly, of the 7 lakh tonnes of synthetic rubber consumed in the country annually, 4 lakh tonnes is imported.
Natural rubber is a major raw material for the automobile industry (and is used to make everything) from tyres to engine parts. Natural rubber is imported from countries like Malaysia, Indonesia, Vietnam etc. Given the import dependence of the industry for raw materials, we are susceptible to the dollar rupee exchange rate, logistics and other problems. Post Covid, like other SMEs, we are facing problems of credit, liquidity and competitive rates. For natural rubber, the government has an import duty of 25 per cent to protect the farmers but this has added to our problems.
Q: What are the major problems the rubber industry is facing now? How helpful have government policies been in this regard?
Post Covid, our main problem is locked up credit limits and inflation in raw material prices. Thus, synthetic rubber, which was priced at $1,800-2,300 per tonne is now available for $3,000-4,000 per tonne. Also, carbon black priced at Rs 55-60/kg is now priced at Rs 135/kg. What has hurt the industry more is that bigger companies which procure the finished products are yet to clear payments. Thus, the dual trouble we are facing is that of lack of cash liquidity and increased raw material prices. With the dollar touching Rs 80, we find it difficult to operate given the increased cost of imports. The government has put in tariff barriers to help the farmers but it ends up hurting the industry. Unfortunately, our industry has got a raw deal in terms of government aid or subsidies.
Q: Does the Indian rubber industry face problems related to availability of skilled manpower?
Yes, the industry has a problem of skilled manpower, especially related to mixing. Raw rubber has to be mixed before it is further treated and at present we are facing problems in the absence of skilled manpower in mixing. Also, lab technicians are in short supply.
Q: What are your expectations from the government?
Like other industries, we want the government to focus on us, in terms of subsidies and export relaxations. We require some help in the form of soft loans and easy availability of credit. Production linked incentives that were made available to other industries were not made available to us. We hope the government takes note of our troubles and helps us.