Rubber products manufacturing units in the Micro Small and Medium Enterprises (MSME) sector have expressed concern at sharp volatility in NR prices and its acute deficit in the domestic market.

Quoting Rubber Board data , All India Rubber Industries Association (AIRIA) has stated that domestic natural rubber (NR) production has hit multi-year low causing a supply crunch in the domestic market.

“Such drastic fall in production is a cause of major concern for rubber MSMEs. There is no option but to import NR. But Government has imposed stiff 25% import duty, apart from port restrictions and reduction in import and export obligation”, said Mohinder Gupta, President AIRIA.

Sharp volatility in raw material pricing seriously disrupts the planning process especially at small rubber units. MSMEs sign long term pricing contracts with buyers of rubber goods keeping in view the expected trend in raw material prices. However in view of almost 50% jump in NR prices in a short time, the profitability of MSMEs will take a severe beating, he added.

Rubber industry in India is dominated by small & medium sector as out of 5500 rubber products manufacturing units, 90% are MSMEs. Rubber units spread across the country manufacture around 35000 different rubber products which find usage in auto, defence, healthcare, agriculture and in various other critical sectors.

Source: The Economic Times