By Sharad P Matade
Managing Director of Swastik Rubber Industries Pvt Ltd, Kolkata, Kamal K Chowdhury has assumed charge as the new President of the All India Rubber Industries Association (AIRIA), the apex body of India’s rubber industry units, at a time when the Association is all set to hold India Rubber Expo (IRE) 2017, Asia’s biggest rubber show. In the thick of activities connected with organizing the mammoth show, he spoke to Rubber Asia on a variety of issues such as his priorities as the new AIRIA President, expected policy changes, challenges and opportunities in the rubber sector, his outlook for the industry etc. According to Chowdhury, rubber industry is a vital component of ‘Make in India’ drive. Expressing hope of a promising future of the Indian rubber industry, he points out that the present turbulent period the rubber products manufacturing industry is passing through may not last for long as rubber is an unalienable part of everyday living. Excerpts:
What are your immediate priorities as the new President of AIRIA?
I have many a thing in my mind. As a generality, our members’ business goal and strategy are: Going for growth, setting priorities for the future, converting strategy to execution, investing for the future weighing a multitude of options, newer product development, faster speed to market – on-time and on-target, moving forward on all directions.
Members’ interest being paramount, the top priority is reorientation/revitalization of our services as business facilitator. Besides strengthening and fine-tuning certain areas of our on-going services, my priority list importantly includes formation of a ‘Think Tank’ consisting of experts from the industry and academia for the benefit of our members. The special stresses of the Think Tank may be: Seeking solutions and innovations, commitment to standards and professionalism, focus on technological sophistication, information transformation and advanced analytics, marketing agility, excellence in business ethics, sophistication of our website and search engine optimization (SEO), gaining traffic and attention through social media — a good indicator of overall company vitality and analytics, etc.
Among others, membership development of the Association is an area for intensification. Association membership is voluntary. We would like to explore if there is any way out for obligatory membership.
Succinctly, the objective as a whole is attainment of new levels of operational excellence towards significant development of the indigenous rubber industry and economic progress of the nation in ‘Grow India’ perspective. Accomplishment of the tasks within ‘SMART’ framework (specific, measurable, attainable, relevant and time-based) shall merit our consideration as the USP.
Of late, AIRIA members have been visiting various countries such as Japan, South Korea and Taiwan in order to explore new markets and to strengthen trades in rubber with them. Do you plan to continue this initiative?
As far as possible, our exploratory efforts will continue especially in the ‘Focus’ countries listed in the Foreign Trade Policy for sustainable export growth. The IMF forecasts that growth in emerging markets and developing economies will increase to 4.2 per cent this year and to 4.6 per cent in 2017. Therefore, in consideration of the potential, our export exploratory effort may have preference in the emerging markets and developing economies on a selective basis.
Tyre companies’ profits are being hurt due to surging imports of cheap tyres, mainly from China. On the other hand, many small and mid-size rubber goods manufacturing units are making profits due to cheap raw materials imports. Your comments on this, please?
Apparently this question has two parts. As regards the first part of the question, ATMA can give a better answer. It is however true that over the last few years, India has been a dumping ground for rampant supplies of finished products from some of the overseas countries at much cheaper prices. India’s FTAs and the inverted duty structure have also paved the way for cheap imports which virtually cripple our domestic industries including the rubber sector. Immediate correction of the anomaly of duty inversion is necessary for purposes of protecting the interest of our rubber industry constituents, strengthening their competitiveness and encouraging domestic value addition in “Make in India” and “Grow India” perspectives.
I am not in agreement with the second part of the question. However, primary goal of business is to earn a profit. Profit is the way to gauge success in the world of business. While it is so, production of rubber articles involves a plethora of complex chemicals. These are grouped into various functional categories, such as rubber, fillers, anti-degradents, solvents, vulcanizing agents, accelerators, activators, retarders, reinforcing agents, anti-tack agents and miscellaneous chemicals. Except rubber, quantum requirement of others is smaller per unit quantity of production of the finished rubber product. LCL import is uneconomical. Further, MSMEs have financial crunch and capacity constraints. It is not feasible for them to maintain large inventories of raw materials by blocking their working capital for a longer period. Hence it is doubtful that they are making sizeable profit by way of import of cheap raw materials.
Rubber products manufacturing units in the Micro, Small and Medium Enterprises (MSME) sector are in deep crisis. What are the reasons for it and how do you hope to cope with it?
Briefly the reasons are pecuniary difficulties such as absence of adequate and timely banking finance, poor technology base, low production capacity, lack of infrastructure, constraints on modernization and expansions, stiff competition, marketing and distribution problems, non-availability of skilled workers at affordable cost, delayed payments, mindset problems, outflow of wealth, more prone to global fluctuations, follow up with various Government departments to resolve problems due to lack of manpower, etc.
How to cope with is a big issue. Sometime back, I came across various recommendations of an Inter-Ministerial Committee for Accelerating Manufacturing in the Micro, Small &Medium Enterprises sector. The recommendations were put forward as supportive wherewithal for the MSME sector. However, on the part of the Association, we shall strengthen our advocacy services as propulsive measures.
What role can the rubber industry play in the `Make in India’ initiative of the Government of India?
Beyond doubt, India’s rubber industry is a vital component of ‘Make in India’ drive. For, applications of rubber are amazingly broad. Rubber is unique, strategic, omnipotent and irreplaceable. No rubber – no transport, no mining, no energy, no household appliances, and so on. Therefore, rubber will indispensably serve the ‘Make in India’ drive as a complement.
What is your take on the National Rubber Policy which is under preparation? How will it help the industry?
Though considerable time having already passed by, reportedly the Government will soon announce the National Rubber Policy (NRP) on the lines of those announced earlier for the Petroleum, Textile, IT and other sectors. The nucleus being an economically vibrant, internationally competitive and ecologically sustainable rubber sector, NRP may address the sector’s adversities and harness the synergies of different stakeholders. It is understood that objective specific policy instruments for the NRP have been conceived with due consideration to the concerns of different segments to achieve the goal. Let’s see and hope for the best.
What will be the impact of the GST once it is implemented?
Once GST becomes operative, it is anticipated that the tax base will be comprehensive. It will be a game changing reform for the Indian economy by creating a common Indian market and reducing the cascading effect of tax on the cost of goods and services. It is expected to have a far-reaching impact on almost all the aspects of the business operations in the country.
What are the major challenges facing the Indian rubber industry?
The policy changes apart, the major challenges are market volatility, material costs, price reduction pressures, labour costs and global competition. In addition, there are operational challenges and priorities for technology advancements for business performance in cutting-edge manner.
What is your outlook for the Indian rubber industry?
There is now sluggish growth especially in advanced economies, weak global trade and diminishing capital flows. Generally, uncertainties from different directions portend difficulties to come. But my feeling is that, in the case of the rubber products industry, the present turbulent period many not continue for long. For, the products made from rubber are a vital part of everyday living. However, the constituent units of the Indian rubber industry must strategically respond to the impact of economic recession. To the best of my knowledge, they are largely optimistic about their own future and their ability to deal with problems that may occur in the years ahead. Against this backdrop, I am hopeful of a promising future of the Indian rubber industry.
How is the preparation for IRE 2017 going on? Will it be bigger and better than the past shows?
Yes, IRE 2017 preparation is going on in full swing. In fact, it is now all set to be a progressively bigger and better show with three tiers – Exhibition, Workshops and Reverse Buyer-Seller Meet. As I understand, the IRE 2017 will extend over an area of 25,000 square metre, will see about 30,000 visitors and have 400 participating businesses from India and abroad. Large areas for Country Pavilions have been blocked for China, Thailand, Germany, Sri Lanka, North and South America, and a number of companies from Japan, Korea, Malaysia, Sri Lanka, Turkey, Taiwan, etc. are participating as exhibitors, delegates and visitors. Among other utility values, this show will be a vital context for internationalization of business and network building activities.