India Facing Fluctuations in Rubber Sector

The Indian rubber industry is at an oscillating state today as reports coming in are swinging from positive to negative. Those who are involved in the market are currently finding ways to curb the latter and push the former forward.

The Negative

With the price of rubber dropping below 40-50 percent four years ago, and severely continuing its decline last year, small growers are forced to cease tapping and find other farming options.

A huge chunk of rubber growers in Kerala, which accounts for about 90 percent or rubber production in India, are considering to end the fiscal after the current sharp plummet of prices.

MD of the Malankara Plantations JK Thomas said that after 78 years of making profit, they are ending the current fiscal with a loss. Even back in 2000 and 2001 where the prices severely plunged the plantation still managed to make some profit, Thomas lamented.

The Malankara Plantation has 1,700 acres of rubber and Thomas has 700 employees below him. Even with tapping foreseen to incur losses, they’re still opting for it as shouldering huge overheads and bearing the social cost of workers are beginning to strain the plantation. Employees are being given allowances for medical, power, and water expenses along with their wages, PF, and gratuity.

Thomas added that a rubber tapper averages 350 rupees a day with 150 more for other benefits. He said that he already implemented a voluntary retirement scheme but to no avail.

There’s also the matter of workers unwilling to agree with productivity-linked wages. PT Joseph, MD of Tropical Plantation stated that it’s about time productivity-linked wages be impose in India. He compared the country’s daily tapping of 300 to 350 a day to the 600 trees being tapped by Sri Lanka and Malaysia’s, both of which have already implemented the wage system.

Another problem is the lack of skilled workers. According to the All-India Rubber Industries Association (AIRIA), there’s a considerable distance between the demand and availability of skill in the rubber sector.

The Positive

However, there’s good news for the synthetic rubber industry. India is expected to become self-sufficient by 2017 as production capacity increases. Stats show that the country’s synthetic rubber is at 112, 886 tonnes in 2013 and 2014, while import is at 371, 839, three-fourth of the overall consumption which is 483,575.

Imports is expected to drop to 300,00 tonnes this year to 100,000 in the next two years, implying stable growth in domestic production which can potentially lead to self-sufficiency.

Producers of synthetic rubber in domestic sector are steadily increasing following positive sentiments from tire manufacturers. There are also several plants that are coming up to further help the industry. It’s expected that India’s annual synthetic rubber production will increase by three fold attributed to these plants that’ll increase output by the end of 2016.

While India is still behind other leaders in the rubber industry, they can still catch up to the race by following the footsteps that successful countries in this regard have taken. The path is already paved; all they need do is ensure they don’t get astray from it.

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