Natural rubber shortage is tightening its grip on India’s tyre industry, with companies flagging concerns over falling domestic supply and rising costs. Several firms have reached out to the central government, seeking urgent steps to stabilise the situation.
Kerala, the country's largest producer and supplier of natural rubber, has been experiencing persistent rainfall that has severely impacted tapping operations. As a result, the supply of rubber to markets has seen a significant dip, triggering concerns across the tyre manufacturing sector.
The Rubber Board's official rate for rubber currently stands at ₹212 per kg, but in the face of falling availability, tyre companies are reportedly paying above this rate to secure raw material. Traders say there has been a clear decline in market arrivals.
Farmers, anticipating further price hikes, are holding back their produce. Additionally, due to the difficulties in sheet processing during monsoon, many cultivators are opting to sell latex instead. With companies now collecting latex directly from plantations, the shift has become more convenient for farmers.
While international rubber prices remain lower than domestic rates, global markets are showing signs of recovery. Prices that fell to ₹188 per kg recently have now crossed ₹200 in markets like Bangkok and Kuala Lumpur.
Production shortages in other key producing countries, including Thailand, are also driving the price rebound. Reports suggest that global output could dip further in the upcoming season. Rising demand from China has further tightened the global supply-demand balance, indicating a possible price surge in the coming weeks.
Data and observations from the field suggest that Kerala’s traditional dominance in rubber production may be weakening. Each year, tapping activity continues to decline. Farmers in central Kerala and other regions are gradually shifting to alternative crops such as pineapple, citing better returns and less labour dependency.
Several plantations remain untapped due to labour shortages. The number of new rubber plantations has also fallen in recent years. Industry insiders believe that if this trend continues, Kerala’s share in India’s rubber output could shrink significantly in the next decade.
In response to the dwindling supply from Kerala, tyre companies have been investing in rubber plantations in the northeastern states. Large-scale planting is underway in states such as Tripura and Assam. The first phase of tapping is expected to begin within two years.
Experts believe that these regions could emerge as major contributors to India’s rubber supply within the next 10 years, altering the traditional geography of rubber production.
To avoid a repeat of the production cuts seen in August and September 2024 due to rubber shortages, tyre manufacturers have already started scaling up imports. Currently, between 35,000 and 40,000 tonnes of natural rubber are being imported, and volumes are expected to rise further.
Companies are treating this as a buffer measure, anticipating that domestic supply may not stabilise in the short term.
