In the tyre industry, natural rubber is considered a material commodity, as its consumption accounts for more than 30 per cent of the overall cost of raw material consumed. One of the key issues amid growing demand is the supply gap.
India consumed 14.27 lakh tonnes of natural rubber in 2025-26, against domestic production of just 9.05 lakh tonnes. Imports stood at 4.59 lakh tonnes, mainly from Thailand, Indonesia and Africa. This structural gap exposes manufacturers to price volatility. Demand is projected to reach 20 lakh tonnes annually by 2030, even as global supply faces pressure from erratic weather, ageing plantations and growers shifting to alternative crops.
Impact of Price Volatility on MSMEs
Another issue has been soaring crude prices amid the West Asia conflict. On 11 August 2026, prices of domestic RSS-4, a major commercial grade natural rubber was around Rs 283/kg, compared with an international RSS-4 reference of about Rs 267/kg. “If this persists, India could face higher input costs and greater import dependence just when manufacturing demand is expanding,” points out Anay Gupta, President, All India Rubber Industries Association (AIRIA). If input costs remain elevated for long periods, margins get compressed, particularly for Micro, Small and Medium Enterprises (MSMEs) that cannot immediately pass costs on to customers.
However, there is a limit to how much cost can be absorbed internally. The long term answer has to be a combination of stronger domestic supply, efficient imports wherever genuine shortages exist and greater investment in technology and R&D. One of the initiatives to boost domestic production is the INROAD (Indian Natural Rubber Operations for Assisted Development) Project initiated in 2021-22, under which 2 lakh hectares are envisaged to be brought under rubber plantation in the Northeast region. This collaborative project is undertaken in public-private partnership mode involving tyre majors, Rubber Board and Government of India.
The next priority should be making these plantations productive through scientific tapping, high-yielding clones, grower training, processing infrastructure and better logistics from the Northeast to manufacturing centres. With the long-term demand drivers intact, the sustainable route will make India a globally competitive rubber manufacturing hub.