The unprecedented hike in natural rubber prices in the recent past, coupled with fall in demand of some rubber-based products, has put the rubber units of Punjab in jeopardy.
Few years back, the state had 400-450 rubber-based units, majority of which were in the small and medium enterprises (SME) sector, with Jalandhar as the main centre and also famous for the hawai chappal industry. As a result, Jalandhar, which had been the hub of the rubber industry for four decades and where more than 400 units were functional (5-6 years ago), has about 200-250 units now.
The rubber industry manufactures mainly tyres, tubes, transmission belts and rubber footwear (hawai chappal and canvas shoes).
According to the industrialists, canvas shoes are fast becoming outdated with the advent of sports shoes and the demand for hawai chappal is also not very rosy owing to introduction of EVA injection molding slippers. According to the industrialists, rubber prices have risen about Rs 40 per kg in the recent past.
As rubber accounts for 33 per cent of the cost of production, the increase in prices results in high finished product costs making the product costlier compared with other states.
Sources in the industry said there was an acute shortage of natural rubber in Kerala owing to growing demand, the only state producing rubber in the country, as a result of which there was an unprecedented upswing in its prices.
Speaking to Business Standard, Jalandhar Rubber Goods Manufacturer’s Association President B B Jyoti said, “Our input cost has risen significantly in the recent past compared with industries situated in tax-free zone and close to raw material centre. As a result, unable to bear the brunt of rising rubber price, many of the industrialist having low capital base have closed operations.”
“Also, earlier, only Jalandhar used to supply finished rubber products to the entire country but now, the rubber industry is present in almost every state, giving tough competition to Jalandhar rubber industries,” an industrialist said.
Echoing similar sentiments, one of the manufacturers based in Amritsar said, “The transportation cost and incentives given by other states have made the rubber industry of Punjab unviable. The landed cost of products from Punjab after paying central sales tax and freight is higher than that of products manufactured in other states (which are nearer to Kerala).
Further, the escalating rubber prices have made our product cost dearer in export market compared with China.”
Another Industrialist, based in Ludhiana said, "This price increase is hitting the SSI sector very hard. Already they have bear the brunt in recent past and further under the present circumstances, they are not in position to fulfill their export obligation."
Experts are of the view that the production of natural rubber in the country is hardly sufficient to meet the requirements of domestic rubber units manufacturing finished rubber goods products and even the outlook for the current year is not very rosy. Jyoti said, " The government should lift the import restrictions on rubber and also link rubber price with International prices i.e. if the rubber prices go down they should decrease the prices accordingly and vice-versa. Further, the government should ban future trading of rubber and if it is not feasible it can allow only license holders to trade."
