Smes Hurt By Sharp Hike In Rubber Prices

SMEs across India, which use rubber as their chief raw material

, are facing a threat to their sustenance due to the steep hike in natural rubber prices over the last few months.

Sharp rise in natural rubber prices is detrimental to the interests of small-scale units as it leads to an increase in the overall cost of production, thereby leaving them with little option but to stop production temporarily, said Thomas Joseph, agronomist with Rubber Board, Kottayam, Kerala.

According to the official sources, a large number of SME rubber companies in Kerala and Punjab have been forced to close down their units, while many are on the brink of closure as they are unable to cope with the appreciating input costs.

With rubber prices having increased by nearly 25% in the last 4 months, small-scale manufacturing units are in a tight spot as they cannot risk losing their competitiveness by increasing their prices on a weekly basis in line with the rise in rubber prices.

Spiralling prices of natural rubber has lead to reduced offtake of the raw material in the domestic market by SMEs. Besides the unnatural hike in natural rubber prices, spurt in prices of other essential raw materials such as metals, plastic, chemicals and colours during the last few months have only worsened matters for small-scale units, said Arnab Chatterjee, proprietor of India Rubber and Polymer Products, a small-sized supplier of rubber conveyor belts and rubber sheets in Kolkata.

As per industry estimates, several workers are employed in numerous small-scale rubber product manufacturing units and therefore their closure would lead to large-scale unemployment in the sector.

by: David Parks

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