The sharp rise in natural rubber prices by 35-40 per cent amid geopolitical tensions and war-related uncertainty has placed severe strain on MSMEs in the rubber sector, All India Rubber Industries Association (AIRIA) has said.
The association’s president Anay Gupta said that small manufacturers are grappling with escalating raw material costs, shrinking profit margins, delayed payments and rising freight charges. Unlike larger companies, MSMEs are unable to maintain large inventories or absorb sudden price fluctuations.
Gupta warned that India’s rubber industry is moving towards a widening supply-demand gap. While annual domestic consumption of natural rubber stands at around 1.4 million tonnes, local production remains significantly lower, forcing greater reliance on imports. Global supply disruptions, shipping bottlenecks and geopolitical instability are further aggravating price volatility and supply uncertainty.
At the same time, demand from electric vehicles, infrastructure, healthcare and industrial manufacturing sectors continues to expand rapidly. To reduce long-term dependence on imports, India has begun extending rubber plantation activities beyond traditional cultivation centres in Kerala to non-traditional regions such as Tripura and other northeastern States, he said.
Climate-related risks
Climate-related risks are also emerging as a major concern for the industry. Excessive rainfall, floods, heat stress and erratic weather patterns are affecting plantation productivity, particularly in Kerala where rubber cultivation is heavily concentrated. Diversification of plantations into non-traditional regions, along with climate-resilient farming, modern irrigation systems and technology-driven cultivation practices, may become essential for the sector in the coming years, Gupta said.
The industry, according to him, is currently facing a three-fold challenge — increasing production, controlling costs and meeting sustainability expectations. Global buyers are increasingly insisting on low-carbon manufacturing, recycling systems, traceability and environmentally sustainable production practices. However, such sustainability investments could raise short-term operational costs, particularly for MSMEs.
The future growth of the sector will depend on how effectively companies balance profitability with sustainability and energy-efficient manufacturing, he said.
He also pointed out that the future of the rubber industry extends far beyond tyre manufacturing. Demand for advanced rubber products is rising sharply across sectors such as EVs, defence, railways, healthcare, aerospace, electronics, renewable energy and industrial automation. Modern industries require high-performance rubber components offering superior durability, sealing, insulation, vibration control and thermal resistance, presenting India with a major opportunity to emerge as a global hub for value-added and technologically advanced rubber products.
Published on May 14, 2026