The domestic natural rubber industry has been going through a tough phase. A prolonged slump in rubber prices has hit the plantation sector, particularly small and marginal growers. Other segments are also beset with challenges such as global competition, dumping, non-tariff barriers and technological bottlenecks.

KN Raghavan, Executive Director, Rubber Board, spoke to BusinessLine on the sidelines of the India Rubber Meet 2020 at Mamallapuram, near Chennai, about the measures to mitigate the effect of the slump, and the road ahead for the industry. Excerpts:

While there is no guess on the price front, the easy way out now is to improve productivity. Low productivity is on account of two reasons. People don’t tap (rubber) at all, and they don’t tap during the rainy season due to lack of rain guarding. Also, there are a lot of senile plantations where the output comes down. Firstly, wherever there is no tapping, we are trying to adopt those estates — something like contract tapping. This started in a small way last year and we want to take it forward. On rain guarding, we are tying up with some companies to get their CSR funds so that we can supply rain guarding material for free to small farmers. For medium farmers, we will supply the material free, but when they produce and sell, we will try to recoup the cash at that point. For senile plantations, we are now encouraging replanting.

Yes, there is a dire need to bring in new areas of plantations. Because the consuming industry is growing very fast, catching up with that is a huge challenge. Since traditional belts such as Kerala and Tamil Nadu have saturated, we have to go to the North-East and other areas, such as Karnataka, West Bengal and Odisha. For the new regions, the government has decided to extend soft loans through NABARD with interest subvention instead of subsidy, which will be only 10-15 per cent of the total cost. So, in the first seven years, growers don’t have to pay anything due to the subvention. From the eighth or ninth year, interest will have to be paid and, from the 10th year onwards, only principal will be paid. Over 15 years, growers in new regions will be able to handle the cost. We are in talks with NABARD. Maybe in two or three months, a scheme will be launched, focussing mainly on the new regions.

We have been working on it. Actually, we have already released two cold-resistant clones — one in 2016 and the other, last month. The development of clones is a time-consuming process and takes 25 years. The entire life of the rubber plant has to be monitored. However, we have come out with two (clones). Now we are trying to get something with drought-resistant qualities as the maturity period in States like Odisha is too long — 10 years.

Actually some years ago, the rubber industry was meeting about 90 per cent of the consumption. After that, the consumption industry grew and plantation slowed down. However, the industry is now trying to catch up. Meeting 75 per cent should not be a problem. Even today we have the capacity to produce 1 million tonnes. Last year, we produced 6.5 lakh tonnes and this year we expect 7.25 lakh tonnes. Maybe next year we will go to 8 lakh tonnes. Also, once the price moves northwards, production will also see a spike.

The gap between production and consumption should not be more than 25 per cent for any healthy industry. But in the last two years, the gap has gone up to 45 per cent. This will year we will bring it below 40 per cent. But it has to improve further, though it is a challenge.

It is a big challenge. Our vehicles have undergone a huge transformation. At one level we have splendid roads and, on the other side, we also have village roads. So the stress on Indian tyres is tremendous. The raw material used should be top class as we also have world-class factories in India. There are two challenges — firstly, the quality is not consistent and there are dirt elements. We are working with the industry and have also invested heavily in training for tappers and graders.

We have mooted an idea that is actively under the consideration of the Government of India. We have a proposed a separate institutional mechanism on the lines of big Chinese firms that acquire and own estates. Our entity will be a joint effort between producing and consuming sectors with all of them having a stake in that. This entity can do contract farming, processing and provide technical expertise. We have a huge reservoir of technically qualified people, but there is no proper forum to use it effectively. A viable and profitable business model with everyone on board will help take on the Chinese competition. We have got the technical permission, but the plan is still in an early stage.