Production and trade competitive advantages of natural rubber in India
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Date
2003
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Department of Agricultural Economics, College of Horticulture, Vellanikkara
Abstract
The study entitled Production and Trade Competitive Advantages of
Natural Rubber In India" was undertaken with the specific objective of examining
the emerging trends in production, consumption, export and import of NR and the
to assess the competitive advantages an disadvantages in the specific context of
WTO regime. The study was conducted in the year 2001-03, using both primary
and secondary data.
The trend analysis using different functional forms revealed that a growth
functional form was the best fit for tapped area, production and yield of natural
rubber whereas the exponential function turned out to be best fit for consumption
of natural rubber. An analysis of the composition pattern revealed that natural
rubber is slowly replacing the synthetic rubber in the world as well as in the
Indian market.
The growth rate analysis of the area, tapped area, production and yield of
natural rubber and reclaimed rubber revealed that their growth was highest during
the sixties. It declined substantially thereafter.
More instability was experienced in the production of natural rubber
during the eighties and the nineties. The decomposition analysis revealed that the
price effect was a major contributing factor in the growth of natural rubber output
in India.
There was considerable production advantage for NR producers in India
with the average market price being consistently higher than the cost of
production. There was no comparative advantage for natural rubber production in
India for international trade as revealed by the domestic resource cost ratio. The
Nominal Protection Coefficients indicated that Indian natural rubber was not
enjoying trade competitive advantage in the international market.
The bound rate for natural rubber is now fixed at 25 per cent instead of
100 per cent for primary agricultural commodities because it is classified as an
'industrial raw material" under the WTO agreements. No "surge in imports"
consequent to the removal of quantitative restrictions in natural rubber was
observed. The import as percentage to domestic production was declining over the
years. The export subsidy-limiting provisions are not applicable for India till the
exports reached 3.25 per cent of the world trade. However, in order to play any
significant role in the international market, Indian natural rubber will have to be
more competitive.
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