ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Natural Rubber Sector in India

Changes and Challenges

The changes experienced by natural rubber sector in India during the globalisation period and its consequent challenges are examined. The analysis has been carried out with respect to change in the price and production performance in the country since 1980. The results suggest that there is an increased volatility in prices after economic reforms. There has been a deceleration in tapped area, production, and yield of natural rubber. The drastic decline in yield as compared to other natural rubber producing countries raises questions on the capability of the existing institutional structure.

Agriculture and industrial sectors play an important role in the process of economic development in most of the developing countries with no exception to India. Being an agriculture product and a strategic industrial raw material, natural rubber is closely associated with both these sectors in the economy. Though natural rubber sector accounts for only 0.4% of the gross crop­ped area of the country and contributes very less to agriculture gross domestic product (GDP) (0.64%), its contribution towards manufacturing GDP is 3.63% during 2018–19. This is mainly due to the coexistence of a well-established natural rubber production sector along with the fastest-growing natural rubber consump­tion sector (National Rubber Policy 2019). Not just as a mere supplier of raw material to the manufacturing units, the sector’s contribution towards socio-economic de­ve­lop­ment of the country has been widely discussed in the existing literature (Rajasenan 2010; Joseph and George 2011; Karunakaran 2017). These studies have argued that natural rubber sector is instrumental in providing livelihood, generating employment, regional development, and addressing environmental issues.

One of the important characteristics of natural rubber is that it is an internationally traded commodity. Hence, any change in the international market would have an influence on the performance of the crop in the domestic market. During the pre-liberalised period, the natural rubber sector in the country was not significantly open to international trade (Burger et al 1995). It was a regulated commodity that had strong tariff protection along with domestic market regulations to guard the sector from external competition (National Rubber Policy 2019). With the beginning of economic liberalisation in 1991 and the subsequent implementation of the World Trade Organization (WTO) agree­ment in 1995, the natural rubber sector witnessed several changes, such as increased influence of global market in the determination of domestic prices, reduction in import duties, stiff competition from other major natural rubber producing countries, etc, which have posed several challenges to the crop performance in the domestic market. Studies have noted that these challenges caused a much broader impact on ensuring sustainable livelihood for the dependent population and the development of those regions where the cultivation is concentrated (Mohanakumar and Chandy 2005; Rangachary 2016). In this setting, it is imperative to examine the changes and the challenges experienced by the sector during the post-reform period.

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Updated On : 5th Feb, 2023
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