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India's Tyre Industry Confronts Severe Natural Rubber Shortage
India's tyre industry is grappling with a shortage of natural rubber, a crucial raw material for tyre manufacturing. The Automotive Tyre Manufacturers Association (ATMA) has raised concerns with the Rubber Board about this ongoing issue.
"The tyre Industry has been experiencing tightness in domestic availability of natural rubber for some time," said ATMA Director General Rajiv Budhraja.
Natural rubber is essential for producing heavy-duty and bicycle tyres, tubes, hoses, conveyor belts, foam mattresses, footwear, balloons, toys, and various engineering applications like shock absorption and road surfacing. Approximately 70% of natural rubber produced is consumed by the automobile industry.
Natural Rubber Production and Consumption
In the financial year 2023-24, India's production of natural rubber was estimated at 8.5 lakh tonnes, while consumption reached 14.2 lakh tonnes. This significant gap between production and consumption highlights the industry's reliance on imports to meet demand. According to the Rubber Board, the average price of natural rubber in March was Rs 177 per kg.
The total domestic stock of natural rubber at the beginning of the current financial year was 3.7 lakh tonnes, compared to 4.4 lakh tonnes in the previous year. Budhraja emphasised the urgency of addressing this shortage to prevent disruptions in tyre production processes.
Impact on Tyre Industry
The tyre industry in India is one of the largest globally, with annual production exceeding 200 million units across various categories such as two-wheelers, passenger vehicles, commercial vehicles, and off-road vehicles. Despite high prices for natural rubber reaching multi-year highs, Budhraja noted that the industry faces a severe raw material crunch.
ATMA represents six major companies—Apollo Tyres, Bridgestone India, CEAT, Goodyear India, JK Tyres and MRF—which together account for 95% of India's tyre industry. The association has warned that some producers or traders might be withholding natural rubber in anticipation of further price increases.
Import Reliance and Future Plans
To bridge the deficit caused by insufficient domestic production, India imported 4.9 lakh tonnes of natural rubber during FY24. Indonesia was the largest supplier with 27% of imports, followed by Vietnam (25%) and Cote d'Ivoire (18%). However, imports contracted due to uncertain local arrivals may coincide with peak domestic production seasons.
The tyre industry aims to double its export value by the end of this decade. Companies are targeting an increase in total exports from Rs 23,000 crore currently to Rs 50,000 crore by 2030. This growth could position India as the third-largest tyre maker globally.
Government Initiatives
Prime Minister Narendra Modi recently urged the industry to collaborate with farms to reduce rubber imports. In response, four major tyre manufacturers have committed Rs 1,100 crores for rubber plantations across 2 lakh hectares in North Eastern states to boost domestic production.
The scarcity of natural rubber needs immediate attention to avoid halting plant operations and disrupting production schedules. "Consuming interests have no option but to increase reliance on imports of NR to bridge the huge deficit," stated ATMA.
The Indian tyre industry's future hinges on resolving these supply issues while expanding its global footprint through increased exports and enhanced domestic production capabilities.
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