Rubber shortage forces Indian tire companies to import.

Faced with a severe shortage of natural rubber in the Indian domestic market, tire manufacturers have decided to opt for more imports in the coming months to tide them over the crisis, according to The Hindi Business Line. Tire companies now propose to import 35,000 mt of rubber by September, compared to earlier plans to import 26,500 mt during the April-August period, industry sources said.

For this fiscal year, Indian tire makers are expected to import 60,000 mt of rubber, a 39% jump over the 43,154 mt imported last year. The stock of about 66,000 mt at the end of May was the lowest in nine years. Tire companies consume more than half the total rubber produced in the country.

One of the main reasons for the current rubber shortage in the domestic Indian market is the early monsoon that hampered tapping in Kerala, which accounts for over 90% of the country's natural rubber production. Increased robber exports (India's rubber exports rose 37% to 75,905 mt last year) have also led to a shrinkage of stocks, according to tire makers and other consumers. Companies can import natural rubber duty-free to produce tires for export.

The prevailing high domestic Indian price of rubber is another factor prompting companies to increase imports. Given the current prices and local taxes of about 15%, importing rubber duty-free is said to be cheaper compared to buying from the domestic market.

The industry is also of the opinion that rubber production in 2004 may not rise as much as the projected 6.1%.