Tyre industry anticipates muted growth amid demonetization & rising rubber prices; MSMEs also to be affected

New Delhi, Jan 10 (KNN) India’s tyre manufacturing industry, which also comprises of micro, small and medium enterprises (MSMEs) who supply raw materials to them, have anticipated subdued growth in the wake of falling demand, increased raw material cost, demonetization etc.

Automotive Tyre Manufacturers’ Association (ATMA) said the results shall be seen in the third and fourth quarter of the year.

“As you know that prices are increasing for raw material, this would show the results in quarter 3 and 4. Also, demonetization has reduced sales in certain categories,” said ATMA told KNN.

The association said those Small Scale Industries who supply raw materials will also have to bear the loss due to decline in sale amid rising rubber prices.

“Small scale industries who supply raw materials to tyre manufacturers will face slowdown. But still I don’t think that impact would be much because most of the orders are already in place,” said ATMA.

“Price rise is a cyclic trend, it goes high and then comes down every year according to the global market,” claimed ATMA.

Rubber production has been on the rise this year, with a 12 per cent increase in the eight months to November from a year earlier, to 428,000 tonnes. But as the difference between the domestic and international prices has narrowed, there are fewer takers for the state government's price support scheme. A sum of Rs 596 crore was paid to small growers in the year to June 2016 under the scheme.

Currently, there is a gap of Rs 30 per kilo between the international price and domestic price of NR. At Rs 160 per kilo, international price has been flying above the domestic price of the premium grade RSS-4 (Ribbed Smoked Sheet), which is Rs 130 per kilo this week.

Meanwhile, Rubber MSMEs (Micro, Small or Medium Enterprises) have expressed strong reservations over rubber growers’ memorandum to Commerce Ministry for banning natural rubber (NR) imports for at least six months.

According to All India Rubber Industries Association (AIRIA), any step in this direction would be “anti-industry”. (KNN/RAS)