Vietnam Seeks Indian Investment in Rubber Industry

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Oct. 9 – In a recent visit to India, a delegation of the Vietnam Rubber Association invited the All Indian Rubber Industries Association (AIRIA) to invest in the Vietnamese rubber industry. Vietnam annually produces over 900,000 tons of natural rubber, and is currently seeking to fill the gap in rubber supply that was brought on by heavy downpours in India and Malaysia this summer.

Domestic consumption of Vietnamese rubber only accounts for 15 percent of production, with the remaining rubber exported to other countries. Among these export partners, India stands as the largest importer of the Vietnamese commodity. In the past two years, Vietnam’s natural rubber exports to India have increased 82 percent from 28113 tons in 2011-12 to 51273 tons in 2012-13.

After Indonesia, Vietnam is the second largest exporter of natural rubber to India.

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Vietnam’s rubber productivity rate is 1707 kg/hectare, which ranks second to India’s at 1823 kg/hectare, and is also much higher than the Association of Natural Rubber Producing Countries’ (ANRPC) average of 1442 kg/hectare.

With these competitive features, Vietnam now looks to increase domestic consumption from 15 percent to 40 percent. To reach this goal, it seeks investment from India to set up plantations, manufacturing units and related-industries while also upgrading its technologies.

July and August brought heavy monsoon rains to parts of Malaysia and India, particularly Kerala, the center of its rubber production. This caused destruction to many plantations, hundreds of trees, and related equipment. As a result, a supply shortage in natural rubber emerged despite a long-lasting glut in the market.

Latex production in India fell by 50 percent in July and August, pushing rubber-based industries to look elsewhere for a more stable supply. Some tire firms such as Apollo and Ceat have already entered into contractual agreements with plantations in other countries to counter India’s supply shortage. Tire firms account for 65 percent of the consumption of India’s total natural rubber output.

Rubber prices have been suffering from a glut in the global market. However, this situation should ease in the short-term following increasing demand from the tire industry as auto sales rise, particularly in China and the United States.

Demand for natural rubber coming from the tire industry is expected to increase alongside auto sales. Bloomberg forecasts that global automobile sales will rise 2.9 percent to an all-time high of 83.5 million units this year and an additional 5.4 percent to 88 million units in 2014.

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