Decline in Rubber Prices Likely to Boost Indian Auto Industry

 The recent decline in international prices of natural rubber might boost the Indian automobile industry, experts predict.

The current price of RSS-4 rubber is ₹13,100 per 100 kg, while during the same period in the previous year it was available for ₹18,994 per 100 kg.

"Imports could rise to 400,000 tonnes this year as prices are lower in the world market and demand is rising," Reuters quoted George Valy, president of the Indian Rubber Dealers' Federation. "The growth in imports will continue in coming months."

According to a report by Automotive Component Manufacturers Association (ACMA), vehicle industry is expected to post up to six percent growth in the current fiscal, after having witnessed a loss of two percent in turnover in 2013-14. The auto components industry posted turnover of ₹2,160 crore during the 2012-13 fiscal year, reported Business Standard.

An improvement in India's auto industry could lead to an increase in imports of natural rubber for making tyres by a quarter this fiscal year.

"First signals of economic turnaround are in sight with the car industry registering growth in the last two months," Raghupati Singhania, managing director at JK Tyre & Industries told a news agency.

"Commercial vehicles are also showing signs of improvement. This augurs well for the tyre industry and coming quarters should see improved performance in terms of volumes and profitability,'' he added.

India purchases most of its natural rubber from Thailand, Malaysia, Indonesia and Vietnam and shipments in the first four months of the current fiscal year surged nearly 48 percent.

Rajiv Budhraja, director-general of industry body Automotive Tyre Manufacturers Association, estimates that natural rubber consumption could hit a record 1 million tonnes plus in 2014/15, up from 981,520 tonnes last year.

He expects tyre sales in the truck and bus segment to rise by about three to four percent in the current financial year, while sales in the two-wheeler and passenger car segment could grow six to eight percent.