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RUBBER STAKEHOLDER NEWS : Why Kerala is losing its grip on rubber October 5, 2017
(Last Updated: 09 Oct 2017)



Why Kerala is losing its grip on rubber


Why Kerala is losing its grip on rubber

State faces stiff competition from other nations and also within India

The Association of Planters of Kerala () has raised concerns over the State’s declining share in national  during the last decade.

APK, in its annual report, pointed out that the production of  in the State in FY17 was 4.55 lakh tonnes (lt) against 4.38 lt in FY16, witnessing only a slight increase of 3.87 per cent.

Kerala’s share has now come down to 69.66 per cent of the national production from around 92 per cent a decade ago.

One of the reasons attributed by the planters’ body was the increase in area under cultivation in non-traditional regions such as North Eastern parts and Sindhudurg in Maharashtra and the hilly regions of Gujara.

Climate change has also played a major role in the reduction of total production over the last five years. Despite a regular increase in the area under cultivation, the report said that Kerala’s share has been dwindling over the last decade.

This is an indication that there will be stiff competition for  growers in Kerala not only from other -growing countries but also from within the country.

Yield takes a hit

It is pointed out that the yield per hectare in the State was showing a constant downward trend over the last five years due to the fall in prices.

Though the price of the RSS-4 grade improved from the previous years  of ₹113/kg to around ₹135, it is nowhere near the break-even  for the grower.

The increase in total production this year was partly due to a moderate increase in prices, coupled with the price stabilisation scheme announced by the Central government.

However, output is far below the potential, and a considerable area remains untapped.

N Dharmaraj, former Upasi president, said that the production is only about 60 per cent of the installed capacity of Kerala’s natural rubber production.

Interference by the government with normal agricultural operations, vital to maintain productivity in rubber plantations, is also causing loss of production and consequent loss of employment.

The report also said that many growers have stopped tapping and if the situation continues, they may stop cultivating rubber and move on to other crops. According to Dharmaraj, the rubber economy is crucially linked to Kerala’s economy, and sustaining profitability in this sector within the framework of national production and international trade should be a key priority for the the government.

Other factors

APK said that imports by the  industry even during the peak production months, along with the increase in wages and cost of production, have made rubber lose its attraction.

Added to this, the scarcity of tappers and high level of absenteeism, diversion of farmland to other non-farm activities, and the depleting size of holdings are other factors behind the decline in production.





Kerala’s plantation sector losing ground on rising imports, taxes



Import, high taxes hit growers of cash crops

Kerala’s plantation sector has been severely hit due to the unrestricted import of cash crops – the total value of production in the State has declined from ₹21,000 crore in 2012-13 to ₹ 9,751 crore in 2016-17.

According to the Association of Planters of Kerala (APK), import of plantation commodities, coupled with the inability of planters to move up in the value chain, have made the sector a low-end commodity producer.

Thomas Jacob, Chairman, APK, cited issues related to climate change, high taxation and high input and manpower cost as the reasons for the surge in production cost and low productivity of land.

Cash crops affected

The huge imbalance between cost of production and price realisation in the industry has led to losses in tea, coffee, cardamom and rubber production.

Land-related issues, according to C Vinayaraghavan, former president of APK, have impacted re-planting in tea estates and production has come down to 1,200 kg/hectare. However, productivity has gone up in Tamil Nadu to touch 2,600kg/hectare due to re-planting initiatives.

A similar situation exists in rubber plantations as 2,000 hectares are yet to be re-planted, said N Dharmaraj, former president of Upasi, adding that re-plantation could bring in fresh investments worth ₹1,000 crore to the State.

To tide over the crisis, the planters body urged the State government to encourage inter-cropping and value-addition in plantations, which willincrease the overall turnover of the plantation industry. The major crops that could be cultivated are citrus crops, rambuttan, mangosteen, jackfruit and local varieties of mangoes that are getting extinct.

Kerala has over 7-lakh hectares of plantation crops, covering 27 per cent of the total cultivated land. Around 42 per cent of the GSDP contribution of crops in the State is from plantation crops. The plantation industry provides employment to around 3.3-lakh workers and distributes nearly ₹5,300 crore as wages in a year.

According to APK, growers still pay a Plantation Tax of ₹700 per hectare and an Agricultural Income Tax of 30 per centfor all commodities, along with GST. All other States, including Tamil Nadu and Karnataka, have repealed these taxes.

VK Ramachandran, Vice Chairman, Planning Board, said that the State government will resolve the crisis faced by the plantation sector in Kerala.

The planters body re-elected Thomas Jacob, the Director of Poabs Group, as the Chairman; BP Kariappa, General Manager, Kanan Devan Hills Plantation Company, is the Vice-Chairman.


Rubber planters fear price fall after GST implementation



Decline in demand from micro and small industries


Growers of natural rubberseem to be concerned about the likely decline in prices in the short-term due to diminishing demand from micro and small industries after the implementation of GST.

Sources pointed out that the price of RSS and ISNR – the main raw material for the industry – has come down, with RSS IV dropping to lower levels from an average ₹145/kg in April.

This being the reference grade, prices of all other grades and forms of rubber have also come down. Besides, rubber imports still continue despite the low prices of the commodity impacting domestic demand.

Consumption by micro and small-scale industries in the non-tyre sector has declined due to the non-registration of the units under GST. The non-tyre segment consists of industries that produce goods out of latex grades – balloons, gloves and condoms.

Vinod Simon, the past president of the All India Rubber Industries Association, told BusinessLine that business in the non-tyre sector since July has slowed down. It may continue for one or two quarters until the uncertaintyclears. “This will the impact the prices. But this will be a temporary phenomenon and the cycle will bounce back,” he said.

‘Restrict imports’

Officials at the Association of Planters of Kerala point out that the rubber sector is entering a high cropping season, and local material will be available in abundance. To improve prices, the officials suggested suitable policies to restrict imports.

Some input materials – such as plastic shells for tapping, fungicides, sheet rollers and other processing equipments – have gone into a bracket of higher taxation, which has adversely affected growers, who must pay more for production. This needs to be reviewed and corrected, the officials said.

GST recognises unregistered buyers, but buying and trading mandates having a licence to deal in rubber, according to the Rubber Act. A large segment of the business in North and West India, mostly micro industries, do not have a licence and deal with very small volumes of rubber. These business units are not able to operate under the new environment.

Ruling out any immediate price fall, George Valy, the President of Kottayam Rubber Dealers Federation, said that the supply in the market is tight due to a decline in production. Afternoon rains in the growing areas and Onam vacations have impacted tapping in a big way, he said.

However, the tyre sector may not face such issues. Manufacturing companies have the liberty to import as global prices of rubber continue to be low.

India: Rubber Industry Poised for Growth: AIRIA


MUMBAI: The industry growing at healthy pace of 10% is set to reach . 80,000 crore Recent data from CAPEXIL indicates the exports of  products increased by 5%, boosted by non-tyre  products.

This is noteworthy as the sector has witnessed dwindling growth rates during the last three fiscals, and indicates the large potential for growth if proper policies are in place.

The  in  manufactures around 35,000 different rubber products that find use across critical sectors like auto, defense, healthcare, agriculture and other niche areas.

The rubber products industry in India, the size of which is currently estimated at Rs. 75,000 crore, is dominated by the small-scale sector.


Around 90% of the 6,000-plus rubber products manufacturing units in the country are micro, small and medium enterprises (MSMEs) and they account for 40% of the rubber products exports.

India is the 3rd largest producer and 2nd largest consumer of rubber in the world. Estimates suggest over two million people are employed in the rubber industry including tyre units, and another one million in the plantation sector across the country.

“Rubber is a sunrise sector in India and fits perfectly with the government’s ‘Make in India’ and Skill India initiatives, but also suffers from the shortage of skilled labour and abnormality in the duty structure which is unfair to domestic manufacturers,” says Kamal K. Chowdhury – President, All India Rubber Industries Association (AIRIA).

The not-for-profit body serving the rubber products industry and trade with the objectives of safeguarding and promoting interests of the Rubber Products Industry, especially the MSMEs.

The association, established in 1945, has over 1300 members at present. The per capita consumption of rubber in India is estimated to be very low, in the range of 0.8 – 1 kg, against a global average of 3.2 kg, and as high as 12 to 14 kg in , Europe and the US.

Even China has per capita consumption of 8 kg. On the export front, India has a paltry share of 1.48% against China’s 11%. AIRIA maintains that India’s share of export of rubber products can be easily enhanced to 5% in the next 5-7 years to take the country to the top 5 exporters in this sector.

“This gives us an idea of growth potential and we are working towards this objective,” adds Chowdhury. The rubber products industry in India also suffers from skills shortage in the absence of proper and organised training facilities, as the workforce is basically trained on the job.

As against the need for 7 lakh skilled personnel at present, the industry has only about 5 lakh, with a shortage of 2 lakh skilled candidates.

To address this need, Rubber Skill Development Council (RSDC) has been constituted under the aegis of National Skill Development Corporation (NSDC), in collaboration with AIRIA and Automotive Tyre Manufacturers Association (), with the aim to identify and fulfil skill development needs in the rubber sector.

The RSDC encourages the industry to employ skilled and certified manpower and to meet the demand conducts various training programmers across the country covering rubber tappers at one end of the spectrum, and technicians working at the manufacturing units, at the other.

“As a vital component of ‘Make in India’ drive to build things here and sell everywhere, India’s Rubber Products industry is well poised,” mentions Kamal Chowdhury in conclusion.


India: Rubber imports may go up as global rates fall

 Import of natural  is poised to rise again with a softening in global price of the commodity.

India: Rubber imports may go up as global rates fallNatural rubber imports fell 14 per cent between April and  2017 from a year ago to 130,543 tonnes on the back of a spurt in international prices and higher production in India.

Natural rubber imports fell 14 per cent between April and July 2017 from a year ago to 130,543 tonnes on the back of a spurt in international prices and higher production in India. In the same period, natural rubber output in India went up by 7.5 per cent to 201,000 tonnes, according to data from Rubber Board.

“Continuous rain has affected , resulting in a supply crunch in the local market in the last few days. While local prices are hovering around Rs 130 per kg, crumb rubber prices have dropped below Rs 100 per kg in the international market, which could help imports,” said , president of Indian Rubber Dealers Federation. From June, international prices started dipping after a sustained rise for nearly seven months. In its report, the Association of Natural Rubber Producing Countries () attributed this to higher rubber inventories and stronger yen, as there was a deficit in world supply of 648,000 tonnes till July 2017.


Brokers said local prices, which are hovering at Rs 130 per kg, may fall further. “Though there is sufficient stock with buyers, there is a dearth of buyers. Prices could go down to. 125-120 per kg,” said Raju Kanatt, research analyst at Celebrus Commodities. As tapping enters the active phase from September, it is feared that more imports could lead to a slump in prices, which could discourage growers. “Around 35,000 tonnes are imported monthly by consumers, principally the  industry, and they mop up the rest of the requirement from the local market,” Valy said.




Curbs on Chinese tyres lift spirits of rubber growers


The rising import of rubber through imported TBR (Truck & Bus Radial) tyres over the last three years has been hurting domestic growers of Natural Rubber
Afterekkapon/shutterstock.comThe rising import of rubber through imported TBR (Truck & Bus Radial) tyres over the last three years has been hurting domestic growers of Natural Rubber

Production may rise in tune with demand


With the Centre imposing anti-dumping measures on Chinese tyres, natural rubber (NR) growers here are looking to scale up rubber production.

It is pointed out that the import of one lakh tyres is equivalent to the consumption of almost 3,000 tonnes of rubber in a month. If tyre companies turn to the domestic market to source rubber, this would benefit growers, thereby making production more remunerative, said George Valy, President of the Kottayam Rubber Dealers Association.

A subsidy scheme for NR production announced by the Kerala government, and the revival of the monsoon, would help production exceed the 60,000-tonne mark in August. Rubber Board data have also cited a 7.5 per cent rise in production till July.

Satish Sharma, Chairman, Automotive Tyre Manufacturers Association (ATMA) said any step to prevent dumping of tyres would help the entire value-chain of the sector, including a million-odd rubber growers. An indiscriminate surge in the import of Truck & Bus Radial (TBR) tyres from China has been a lose-lose proposition for the stakeholders both in rubber and tyre sector.

Indirect imports surge

Quoting a study, Sharma said the increase in import and dumping of TBR tyres had led to an indirect import of 46,219 tonnes of rubber in the FY17. In fact, such import of rubber through imported TBR has been on the rise in the last three years.

From 23,000 tonnes in FY15, the indirect import of rubber through imported TBR has doubled to more than 46,000 tonnes in FY17. More than one lakh tonnes of rubber have landed in India in the last three years through TBR import.

However, PC Cyriac, Working President of the Indian Farmers Movement (Infam) was of the view that either anti-dumping duty or safeguard duty should be levied on all other cheap products being imported from China to help the local industry survive.

‘Local industry in doldrums’

However, the government has chosen to levy this duty only on tyre imports, purportedly to please the tyre industry. At the same time, natural rubber is continuously being imported into the country in huge quantities, at a low import duty. These huge imports have ruined the small rubber growers and the indigenous production of natural rubber has fallen from 9 lakh tonnes to 6 lakh tonnes.

The Centre can levy safeguard duty on the imported rubber and thus save the small rubber growers. But while levying additional duty on tyre imports, the government has not taxed additional duty on rubber imports. The requests made by the small rubber growers for levying the safeguard duty on rubber imports are kept pending by the Commerce Ministry for more than a year without any action.

“Obviously the government is keen to make the tyre industry more profitable, is not willing to save the small rubber growers who are sinking,” he added.



India: GST may hit natural rubber prices hard

 ‘No clarity on rates for some products’

With lack of demand from micro and small industries due to ambiguity on Goods and Services Tax (GST), prices of natural rubber are likely to decline in the coming months.

The price has dipped from ₹143 per kg in  this year to ₹129-130 per kg (as on Wednesday). This price drop may accentuate in the months of October and November, which is the peak production season.

Further, imports still continue despite the low prices of domestic material, weakening the domestic demand and prices.  


“We are entering into a growing season when abundant local material will be available to the consuming industry. Thus, suitable policies need to be brought in to restrict imports during these high cropping mon ths to improve prices and prevent melt down of this strategic industry,” said B. K. Ajith, secretary, Association of Planters of Kerala.

There are some input materials which have gone into the bracket of higher taxation, adversely affecting the grower and increasing the  of production. Some examples are plastic shells for tapping, fungicides, sheet rollers and other processing equipment and this needs to be reviewed and corrected.

“There is some confusion on the tax rates for certain products made out of rubber like rubber bands etc., which needs to be clearly defined and settled,” said Mr. Ajith.

The non-tyre industry, which comprises micro and very small business, has been adversely affected due to factors such as size,turnover and capacity to weather the implication of the new regulations. Most in the industry have very low turnover and are not registered under GST, which provides for exemption as unregistered producer.

Unregistered producer

However, being an unregistered producer has disadvantages in terms of claiming refund on taxes paid as well as dealing with buyers who will have to discharge the tax liability incurred for the grower.

“This has led to lack of demand from thousands of these small industries which are struggling to cope up with the new ways (GST) of doing business,” said Santhoshkumar, senior vice-president, Harrisons Malayalam Ltd., of RPG group.

Though GST recognises unregistered buyers, rubber buying and trading mandates licence as per the Rubber Act.

A large segment of the business in north and western India, being large consuming sectors, comprised these micro industries which were not having licence and dealing in very small volumes. “These business units, though accounting for sizeable volumes, are not able to operate under the new business environment,” said Mr. Santhoshkumar.

The , however, does not have these issues as they have liberty to import as international prices continue to be low. The organised industry, though trying to get its act right in relation to the teething issues of GST, may shift its dependence to imports until tides over the domestic issues, thus creating a lower demand in domestic market and pulling down prices.

It is expected that the industry will adjust to the new GST regime at the earliest. There are still segments of the industry which are untouched, ignorant and perhaps lacking the ability to deal with the situation. They need to be equipped to tide over the situation. “These will have an impact on demand and prices in the near future,” Mr. Santhoshkumar added.

The  may also review the current system of mandatory licensing so that these consuming industries in the fringes can be brought into the fold through dealers, so that it can carry out its activities of monitoring and controlling the rubber industry and trade as required under the Act.

Natural rubber sector in the country is dominated by the presence of small holders with very small and marginal landholdings. In fact, around 93% of the growers fall in this sector with an average land holding of around 0.56 hectares of land. Thus the prices of the commodity they produce has a major impact on their livelihood.

In the consumption sector, there are two major segments of the consuming industry, the auto tyre sector and the non-auto tyre sector. The auto tyre sector consumes around 70% of the rubber produced in the country and is dominated by tyre majors and the auto component manufacturing industry. There are around 50 tyre companies, but the consumption is dominated by around 8 major tyre companies.

The other major feature of the difference in between these two broad type of industries is that the tyre industry consumes mostly dry rubber grades of rubber like RSS, , etc. The non-tyre segment includes mostly industries producing cracking out of latex grades. The various products they manufacture include balloons, gloves, condoms, adhesives for carpet and other industries, and other medical products.

Another important difference in this industry is that while the tyre sector is dominated by a handful of industries which dominate the market and fall in the large and organised and large industry segment, most of the non-tyre industry consists of micro and small scale industries producing goods for everyday consumption.

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