The Automotive Tyre Manufacturers Association (ATMA) on Tuesday asked the government to allow free imports of natural rubber to the extent of a projected demand-supply gap of 4.4 lakh tonnes.
The domestic deficit for FY22, which was projected to be 45 percent of the production at 3.4 lakh metric tonnes (MT) at the beginning of the year, is now projected to balloon to 55 percent of production at a ‘massive’ 4.4 lakh MT, ATMA said citing Rubber Board of India figures.
In a letter to the Union Minister of Commerce and Industry, ATMA said, “Severe crunch in the availability of NR (natural rubber) is adversely disrupting the production processes at tyre manufacturing units even as the demand for tyres is peaking.”
Stating that the scarcity of natural rubber during peak production season in Kerala is unprecedented, ATMA said it doesn't augur well for the tyre industry value chain.
Speaking to CNBC-TV18 Rajiv Budhraja, director-general at ATMA, said, “cup of woes of tyre industries, which was already full, is overflowing now because of the natural rubber availability situation.
According to him, it is a record that in the last couple of decades during peak production season, which is typically from September till February, the industry has never seen a position as bad as this. It's a historic landmark, if one may say, that despite being in the midst of the peak production season, there are no arrivals of rubber in the market, he said and called the situation unprecedented, extremely challenging, and very worrisome for the tyre industry.
“Typically in the peak months, the production is...last year in the peak it was almost 75,000 to 87,000 tonne, this year we do not expect half of that. Production could be in the range of Rs 40,000-45,000 tonne,” Budhraja said.
Commenting on imports, he said, “We are expecting a deficit of anywhere between 5.50 to 6 lakh tonnes of rubber, which will have to be imported. There is no other way but for imports to take place to keep the domestic manufacturing going.”
He added that on the consumption front, the tyre industry is doing well. Consistently, there has been lakh of tonne of consumption per month for the last six months, but production has lagged way behind, he said.
“Tyre industry is raw material intensive. 70 percent is the component of raw material and of that 40 percent would be natural rubber. So it's a single largest, most critical raw material as far as tyre industry is concerned,” he said.
On factors affecting rubber production Budhraja said, “The reason would be Kerala. First of all, it has had a long spell of COVID, we have seen a very extended period, in which the pandemic prevailed there, which prevented the tapping of rubber and its arrival into the market. Subsequently, in an unprecedented situation, it was two successive cyclones, which kind of impacted the weather pattern in Kerala.”
He also pointed to the challenge posed by recent unexpected rains in the southern state that continued until November 24.
The demand for rubber has been very healthy and positive and the tyre industry has performed very well in terms of exports this year. “Exports are up almost 70 percent over last year and consistently in double digits in the last four to five years. So export performance has been very robust,” Budhraja said.
For the full interview, watch the accompanying video...
Text inputs from PTI