Rubber Industry Calls for Government Support Amid Rising Costs Due to West Asia Conflict
India’s rubber industry is facing a critical crisis as escalating global supply disruptions, linked to the ongoing conflict in West Asia, have led to soaring raw material and freight costs. The All-India Rubber Industries Association has urgently appealed to the government for intervention, highlighting the severe stress experienced by small and medium enterprises (SMEs) and exporters. With prices of essential materials like natural and synthetic rubber skyrocketing, the industry warns that thousands of jobs and export commitments are at risk.
Urgent Call for Government Support
The All-India Rubber Industries Association has formally reached out to the commerce ministry, emphasizing the urgent need for government support to mitigate the challenges faced by the rubber sector. The association reports that SMEs are grappling with significant financial strain due to rising prices of natural rubber, synthetic rubber, and rubber chemicals. This surge in costs is exacerbated by shipping delays, increased insurance rates, and uncertainties surrounding crude oil-linked inputs. The association has requested the government to ensure fair access to raw materials for micro, small, and medium enterprises (MSMEs), provide credit assistance, waive duties on specific synthetic rubbers, and expedite port clearances. Additionally, they are advocating for temporary exemptions or eased import regulations from countries like China and Southeast Asia to facilitate alternative sourcing.
Impact of Rising Raw Material Costs
Anay Gupta, president of the All-India Rubber Industries Association, highlighted the profound impact of rising raw material costs on the rubber industry. He noted that the prices of oil-based materials, such as carbon black and synthetic rubber oils, have surged significantly due to the conflict. Gupta indicated that raw material prices have increased by approximately 30% to 40% since the onset of the war, with the most substantial hikes observed in carbon black, synthetic rubber, and processing oils. Natural rubber prices have also risen by about 10%, driven by demand and the fact that nearly 40% of natural rubber used in India is imported. The conflict has led to increased freight charges and insurance costs, further straining the industry.
Shipping Challenges and Import Dependence
The association has reported that shipping lines have imposed steep surcharges, compounding the financial burden on manufacturers. Gupta mentioned that shipping costs have surged, with a $2,000 surcharge on 20-foot containers and a $3,000 surcharge on 40-foot containers. Additionally, insurance costs have risen, and freight charges have nearly doubled. This situation has made the rubber sector particularly vulnerable, given India’s reliance on imports. Currently, India produces only about 60% of the natural rubber it consumes, while synthetic rubber imports account for a significant portion of domestic demand. In the fiscal year 2025, India consumed 856,900 metric tonnes of synthetic rubber, with nearly 48% sourced from imports.
Consequences for Export-Oriented Segments
The ongoing conflict is expected to have a substantial impact on export-oriented segments of the rubber industry, including automotive components, belting, footwear, and sports goods. Gupta emphasized that the repercussions are widespread, affecting all sectors that utilize rubber and its inputs. In Telangana, the rubber industry consists of approximately 800 units, primarily MSMEs, generating an annual turnover of around Rs 3,000 crore. This sector contributes between 0.5% to 1% of the overall manufacturing output and less than 1% of the Gross State Domestic Product (GSDP). Clusters around Hyderabad and Mahabubnagar are known for producing hoses, tubes, sheets, and profiles, while reclaimed rubber units focus on processing waste tires. The industry’s future hangs in the balance as it navigates these unprecedented challenges.
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