Kerala floods put rubber products manufacturers under pressure amid declining raw materials

Non-tire rubber products manufacturers, who are experiencing a 20 percent increase in natural rubber prices following the floods in Kerala, are apprehending that their profitability could be affected with rising input costs, officials said here on Friday.

They also said that domestic rubber products like tubes and cycle and rickshaw tires, conveyer belt, footwear, and others could face the threat of losing market share to imported finished products.

"Natural rubber production in India is around 6 lakh tonnes, while our consumption is around 10 lakh tonnes. Kerala contributes about 80 percent of the country's natural rubber production. Floods will affect the (natural rubber) production by about 15 percent," All India Rubber Industries Association's President Kamal Kishore Chowdhury said.

According to him, the yield for natural rubber production has been stagnant while consumption has been growing by around 10 percent.

Natural rubber prices shot up by 20 percent following the floods in the southern state and might go up further, said Vikram Makar, Chairman of India Rubber Expo, 2019 to be held in January in Mumbai.

"With increasing natural rubber prices, the cost of our rubber products will naturally go up. Accordingly, we may have to increase the prices of our finished products but there is a threat of losing the market to imported finished products," he said.

Explaining the duty structure on imported raw materials and finished products, Chowdhury said "Imported raw materials including natural rubber attract 20-25 percent duty while up to 10 percent duty is imposed on imported finished products. We urge the government to minimize the raw materials import duty in order to make domestic manufacturing competitive."

He also said the industry for non-tire rubber products is around Rs 45,000 crore, which has been growing by 8-10 percent annually.