expanding the supply base for indian rubber industryclinic.rubberboard.org.in/pdf/ircpdf/d3-sp-01...

02-11-2012

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Expanding the Supply base for

Indian Rubber Industry

Dr AK Krishna Kumar

Executive Director

IL&FS Cluster Development Initiative Limited

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Status of Natural Rubber (NR) Production in India

02-11-2012

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Indian NR Sector Highlights

Fourth largest producer

Sixty times increase in production in Sixty years

Second largest consumer after China

First in ProductivitySeven times increase in six decades

Net Importer in general

Widening demand – supply gap

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• 737,000 ha rubber planted area

• 1.19 million smallholdings (below 10 ha)

• 550 Estates

• Daily employment – Around 500,000 persons

Traders ‐ 9650Processors ‐ 140Consumers ‐ 4350

Cooperatives ‐ 260

Rubber Producers Societies ‐ 2300

Self Help Groups ‐ 1450

18 producer companies in the RPS Sector

Profile Of Indian NR Sector

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Key Facts about NR Production in India

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6.31 6.49

7.127.50

8.038.53

8.258.65

8.318.62

8.99

6

8

10

(LakhTonnes)

NR Production Trend(2001-02 to 2011-12)

6.386.95 7.20

7.558.01 8.20

8.61 8.729.31 9.48 9.64

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8

10

(Lakh Tonnes)

NR Consumption Trend(2001-02 to 2011-12)

• Kerala accounts for about 90% of the total NR production in the country.

• Rubber production in Kerala grew at 2% during 2005‐10

• Ribbed Smoked Sheet (RSS) account for 70% of total production followed bySolid Block Rubber (15%) and Latex concentrate (10%)

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Import

Export

0

50

100

150

200

20032004

20052006

20072008

2009

Value (in thousand tonnes)

Import

Export

India’s Trade in NR

• India is a net importer of NR

• The fall in exports is due to reduced production and fall in internationalNR prices

Source: Report on Securing availability of NR for India, E&Y

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Shift in NR Utilisation in India

• NR consumption in Tyre sector has grown from 48% to 65% between 2001‐02and 2011‐12 due to rapidly growing automobile industry .

• NR consumption in India has increased at 3.2% during 2000‐10

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48%52%

2001-02

Tyre Non Tyre

65%

35%

2011-12

Tyre Non Tyre

NR Availability in India

2010‐11 2011‐12 2012‐13 Est. Projected

2016‐17

Projected 2019‐20

Projected 2025‐26

Domestic NR Production

861 899 926 1141 1314 1600

Domestic NR Consumption

948 965 1035 1235 1409 1835

Gap (shortfall) 87 66 106 94 95 235

(‘000 tonne)

Estimated from the Rubber Board, Govt. of India & various other secondary source

• There is already a shortfall in domestic NR production

• A deficit of 235,000 Tonnes has been projected by 2025. However, the gapis believed to be much higher .

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Increasing NR Availability : Possible StrategyProduction Front

• In Traditional areas

Intensify R&D for new high yieldingclones

Promote Re‐planting

Intensify productivity enhancementdrive

Improve skill levels of tappers

• In non traditional regions within India‐ tap the full potential

Development of high yielding clones which are suitable for high altitudes anddrought resistant

Large scale adoption of successful development models evolved by RubberBoard in NT areas

State Potential area (ha)

Area planted (ha)

Tripura 100,000 59285*

Assam 200,000 23705

Meghalaya 50,000 7740

Nagaland 15,000 3515

Manipur 10,000 2380

Mizoram 50,000 735

Arunachal 25,000 720

Total 450,000 98,080

Source: Rubber Board

• Contain demand by redesigning rubber products through

Technological innovations

Use of recycled rubber

• Increased imports

Diversify imports to mitigate risks‐Indonesia is emerging as themajor exporter of NR to India with its share rising from 14% in 2005to 48% in 2010 while Malaysia’s share has fallen drastically from 36%to 3 % during the same period

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Increasing NR Availability : Possible Strategy

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Challenges for Increasing NR Availability in India

• In Traditional areas

Growing industrialisation and urbanisation

Stagnating yield

Ageing plantations

Limited land available for expansion

Reducing pool of tappers due to growing / alternate jobopportunities

• New locations within India

Low yield due to climatic conditions

Lack of availability of customised clones

Lack of requisite skill levels of tappers and others engaged inthe sector

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• Increased imports

China’s share in global NR consumption has increased from 28%in 2007 to 34% in 2010.

China’s NR demand to double in next decade and will account for46% of global demand.

China meets only 20% of its demand of NR domestically and restis met through imports

Challenges for Increasing NR Availability in India

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The Demand – Supply Gap Challenge

• According to E&Y Study (2010),

“ Despite stretching India’s potential to themaximum, India would still need another Kerala innext 15 years”

• India should look for captive plantations opportunitiesoutside the country for ensuring regular and sustainedsupply of NR

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The Demand – Supply Gap: Potential Outside India

The potential locations can be Asia,South and Central America and Africa

Currently, South & Central America accountsfor 2% of world NR production. Brazil andGuatemala are the major rubber producers inthe region

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• Currently it produces 4.5 lakhtonnes of rubber annually

• Nigeria, Cameroon, Ivory Coast,Gabon, Ghana, Liberia, Ethiopiaetc have plantations

• Other potential locations includeKenya, Congo, Tanzania

The Demand – Supply Gap: Africa’s Potential

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Status & Projection of NR Production in Africa

2008 2009 2010 2011 2015 2020

Africa 447 425 449 471 628 855

Ivory Coast 194 206 220 238 359 518

Liberia 85 59 66 66 80 102

Nigeria 49 45 45 45 51 78

Cameroon64 59 60 61 65 69

Others*56 55 58 61 73 88

* Including Ghana, Zaire and Gabon

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(‘000 tonne)

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Why Africa?

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AFRICA – entering into “get noticed” zone

TODAY

• $ 1.6 trillion – Africa’s collective GDP in 2008

• $ 860 billion – Africa’s combined consumer expenditure in 2008

• 316 million – new mobile subscribers signed up since 2000

• 60% of world’s total uncultivated and arable land belongs to Africa

• 52 cities having population more than 1 million each

• At least 20 companies having revenues at least of $3 billion

TOMORROW

• $ 2.6 trillion – Africa’s collective GDP in 2020

• $ 1.4 trillion – Africa’s combined consumer expenditure in 2020

• 1.1 billion – number of working age people in 2040

• 128 million of African households having discretionary income by 2020

• 50% of population will live in the city by 2030

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Africa is world’s 3rd fastest growing region

"1970" "1980" "1990" "2000" "2001" "2002" "2003" "2004" "2005" "2006" "2007" "2008"

461

694839

1067 1108 1144 1191 1258 1323 1400 1483 1561

African Annual Real GDPIn $ billion

Asia

Middle East

Africa

Central & Eastern Europe

Latin America

World

Developed Economies

8.3

5.2

4.9

4.8

4.0

3.0

2.0

Compound Annual Real GDP Growth 2000 ‐ 2008% of constant exchange rates

Growth Factors: commodity boom, stable macroeconomic conditions, structural reforms and large inflow of FDI

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Myths are breaking –Africa is as urbanized as China is, less rural than India is

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Africa’s growth is widespread across sectors

Other Services

Utilities

Tourism

Real estate, business services

Construcution

Public administration

Financial intermediation

Manufacturing

Transport & Telecommunications

Agriculture

Wholesale & retail

Resources

6

2

2

5

5

6

6

9

10

12

13

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Sector‐wise share of change in GDP, 2002‐2007CAGR , %

7.1

6.8

5.5

7.8

4.6

8.0

3.9

7.5

5.9

8.7

7.3

6.9

Percent, 100% = $ 235 billion

Note: Other sector includes HEALTH, SOCIAL SERVICES, HOUSEHOLD SERVICES

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India – Africa engagement extends beyond political and

diplomatic arena to partnership in nation building through

knowledge and skill strengthening & technology and

economic intermediation ……

India ‐ Africa Engagement

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1. Agriculture (TA Programmes)

2. Manufacturing (Textile & FP Cluster)

3. Rural Development (Technology Parks)

4. Infrastructure (Concessional Loans)

5. Education (New institutions / Universities)

6. Health

7. Trade & Finance

8. Security

Rubber Sector should leverage Government of India’s

policy for rubber sector development in Africa

India ‐ Africa Engagement Across Sectors

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Why Africa for NR?

• Availability of land and favourable agro‐climatic conditions

• Proven higher productivity

• There are some existing rubber plantations which can be tapped.

• Favourable policies of the Governments as they need capital andtechnology

• Rubber is also a priority for many countries in Africa as it providesemployment and livelihood opportunities to large number of people

• Africa is strategically located having access to Europe and Asia

• Africa in addition to being a fall back option for Indian rubber industrymay also provide business opportunities for expanding the businessesoutside India

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Advantage India ?

• India has experience in growing rubber in wide ranging agro ecologicalconditions:

• Traditional region close to optimum conditions

• North Eastern region‐ Low temperature, High Altitude, marginalsoils

• Western India – Higher temperature ,drought

• Eastern India‐High temperature, High wind , prolonged drought,lowtemperature

• Dealing with wide range of target group ‐shifting cultivators to highlyeducated small growers to large growers

• Target group specific implementation models

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Intensive engagement in Africa

Favourable duty regime for NR imports

Promoting industry in the downstream sector

Private sector being engaged for rubber plantations through various

incentives

Expansion of area under rubber plantations

China’s Strategy for Rubber in Africa

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Rationale for investment in Plantations in Africa by Indian Rubber Industry

• Developing a supplementary supply base for NR

• Unlimited public funds to promote NR as a social developmentactivity unlikely to be made available

• NR plantations itself can be a commercial venture for manufacturingcorporate houses if large tracts of suitable lands at concessional ratesare available –Africa offers this

• Africa is an emerging market‐Offers opportunity to expand productionbase

• Proximity to consuming markets like Europe help exports

• Scope for integrating with Govt of India’s economic engagement policywith Africa

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Possible Options in Implementation

• The possible Operational Model in Africa may include thefollowing

Contract Farming (including small holders)

Management Contract for existing plantations

Joint Venture (PPP, PPCP etc)

Long term Lease

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Way Forward

• Detailed analysis of opportunities in Africa

• Dialogue with respective Governments with possiblemodels of engagement on value chain approach (cultivationto processing)

• Evolve suitable development models

• Identify appropriate funding sources

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Devising sustainable, multistakeholder PPP based solutions for MSME development

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Infrastructure Leasing & Financial Services Ltd. (IL&FS)

Promoted by the CBI, HDFC and UTI

Shareholding pattern

IL&FS : An Overview

27%

13%

24%

13%

9%

8%6%

LIC/ UTI

HDFC

Orix Corporation, Japan

Abu Dhabi Investment Authority

Central Bank of India

State Bank of India

IL&FS Employee's Welfare Trust

……..a Financial Institution

Infrastructure Leasing &Financial Services Ltd.(IL&FS)

Evolved along routesperfectly configured tobusiness requirements

Technical support andservice groups providespecialized expertise

Project development andsectoral companies housethe ability to seed initiativesand carry them through tocompletion

Strong core skills ‐ key tosuccessful projectdevelopment and projectfinancing across sectors ‐have been developed withinthe Group

IL&FS spreading its expertise

across a variety of sectors,

nationwide

Transpor‐tation

Area Development

Cluster Development

Finance

Power

PortsWater &

Waste Water

Urban Infrastructure

Environment

Education

Tourism

IL&FS : An Overview

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IL&FS Group Companies

IL&FS : An Overview

IL&FS Infrastructure Development Corp. Ltd

(IL&FS IDC)

IL&FS Transportation Networks Ltd. (ITNL)

IL&FS Ecosmart Ltd.

IL&FS Property Management & Services

Ltd. (IPMSL)

IL&FS Cluster Development Initiative

Ltd. (ICDI)

IL&FS Investsmart Ltd. (IIL)

IL&FS Investment Managers Ltd

(IIML)

IL&FS Trust Company Ltd. (ITCL)

IL&FS Financial Ltd. (IFIN)

IL&FS Education and Technology Services

Ltd. (IETS)

IL&FS Infotech Ltd

Learnet India Ltd.

Manipal Healthcare

INFRASTRUCTURE

FINANCIALSOCIAL

Industrial Infrastructure

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Greenfield Cluster Parks….Some Initiatives

• Textile Park

• Leather park

• Pharma park

• Engineering Park

• Medical Devices Park

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StateNo of

Parks

Andhra Pradesh 5

Gujarat 7

Karnataka 1

Madhya Pradesh 1

Maharashtra 9

Punjab 3

Rajasthan 5

Tamil Nadu 8

West Bengal 1

Total 40

Projects approved so far under SITP

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SKILL DEVELOPMENT INITIATIVES

IL&FS works extensively in furthering the skill agenda in the country

• 370 IL&FS Skill Hubs and Spokes across 24 states

• Mobilize candidates from 498 districts out of the total 641

• Over 1000 Industry partnerships

• Preferred Govt. partner in Skills training

• IL&FS Skills Training Programs are benchmark programs in various industries

• Competencies across the skills training value chain – content development, training of trainers and training delivery

IL&FS awarded the Best Private Sector Company in Skills Development at the FICCI Global Skills Summit, 2011

IL&FS awarded the Best Private Sector Company in National Skill Development Corporation Partners Meet 2012

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Agri Business, Rural Livelihoods, Area Development & Africa Initiatives

AreasofOperation

PolicyAdvisory AgriInfrastructure

RuralLivelihoods

AreaDevelopment

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PolicyAdvisoryPolicyAdvisory

• Preparation of 11th Plan Working Group documents, Ministry of FoodProcessing Industries, GoI

• Preparation of the 12th Plan Document with MoFPI, GoI

• Preparation of Vision Documents for State Governments on Food Processing (Bihar,Tripura, Jharkhand, Arunachal Pradesh, Andhra Pradesh)

• Task Force Report on Cold Chain Development in India

• Development of Action Plan for Biotech Sector in Rajasthan

ServiceOfferings

RuralLivelihoodRuralLivelihood

Agri InfrastructureAgri Infrastructure

AreaDevelopmentAreaDevelopment



• Mega Food Parks , MoFPI

• Cold Chain, MoFPI

• Establishment of Terminal Market at Patna and Odisha

• Revival of F&V Plant, Bihar

• Implementation of food processing projects in Tripura with Government of Tripura

• Establishment of Rubber Industrial Park in Tripura

• Project Consultant for AIDIP‐ ADB Project, Flagship Program of Asian Development Bank inAgriculture Sector in India.

ServiceOfferings



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• Tripura Bamboo Mission

• Narsapur Lace Cluster

• National Rural Livelihood Mission (NRLM)

• Rural PPP project for GiZ

• Bihar Handlooms cluster development

• Chanderi Handlooms cluster development


ServiceOfferings




• PURA

• Growth Pole


ServiceOfferings



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PURA : Managed infrastructure services for local area economic development through a cluster approach…

Health Infrastructure: Rural Hospital

Vocational Skills School

K‐12 School

Physical Infrastructure – Water Supply, Sanitation, SWM, Roads & drainage, Street lighting

Public Private Community Partnership

Agri clusters:• Rose and aromatics• Fodder cultivation

www.ilfsets.comIL&FS Education & Technology Services Limited

Education ● Employability ● Empowerment

Clusters

IL&FS Clusters - Africa Initiatives

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Africa Initiatives Projects under 2nd India Africa Forum Summit

Cotton Technical Assistance Programme for Africa

Ministry: Ministry of External Affairs & Dept. of Commerce (GoI)

Scope of Work :

o Focus Countries – Benin, Burkina Faso, Chad, Mali, Malawi, Nigeria & Uganda

o Preparation of country specific action plan

o Programme structuring & Advisory on institutional framework

o Proposition of implementation strategy including project development, monitoring & supervision, investment promotion

Clusters

Government of India



Africa Initiatives Projects under 2nd India Africa Forum Summit

Setting up of Food Processing Cluster in Africa

Ministry: Ministry of External Affairs & Ministry of

Food Processing Industries (Government of India)

Scope of Work:

o Focus Country – To be identified by African Union

o Formulating Strategy for Project Implementation

o Project Management, Supervision, Monitoring & Evaluation

o Investment Promotion & Advisory

Clusters

Government of India

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Africa Initiatives

Detailed Project Report for Setting up Textile Cluster in Ethiopia

Ministry: Department of Commerce, Government of India

Scope of Work :

o Study of textile sector & value chain in Ethiopia

o Assessment of Investment Climate for Industry Set Up

o Preparation of Model Project Report, Master Plan, Block Cost Estimates, Project Structuring, Investment Promotion

Study on “Creating Sustainable Textile & Apparel Value Chain in Cotton - 4-Countries”


Scope of Work :

o Focus countries - Benin, Burkina Faso, Mali & Chad

o Study of Cotton Value Chain & Textile sector

o Assessment of investment climate for value chain development

Clusters



Africa Initiatives

Feasibility Study on “Assessing Potential for Development of Food Processing Industry in the Country” for Government of Burundi

Ministry: Ministry of Agriculture & Livestock, Government of India

Scope of Work :

o Resource base assessment for development of food processing industry

o Identification of food production clusters

o Strategy formulation for development of the sector

o Estimation of required investment and possible sources of fund

o Proposition of implementation structure for proposed interventions

Assistance in Drafting Composite “Trade & Investment Strategy Paper for Africa”


Scope of Work :

o Evaluation of African Countries for Trade & Investment Promotion

o Identification of key focus areas for interventions

o Policy Advisory & Strategy Formulation

Clusters

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Africa Initiatives - Group Companies

Study on the Immediate and Long Term Value and Relevance of Botswana

Technical Education Programmes (BTEP) for the Department of Technical

and Vocational Education and Training in Ministry of Education and Skill

Development , Republic of Botswana. The study is being funded by the African

Development Bank (AfDB).

Implementing Enterprise GIS solution for Africal Airtel (Zain Operation) in

16 countries (Nigeria, Kenya, Ghana, Malawi, Seychelles, Sierra Leone,

Tanzania, Uganda, Zambia, Burkina Faso, Chad, DRC, Niger, Republic of

Congo, Gabon, Madagascar)

Assisted Ministry of External Affairs, Government of India in evaluating loan

proposals from Togo on Farming and Cultivation of Rice, Maize, and

Sorghum and Rural Electrification

Financing various projects in Africa including Karaturi and Ruchi Soya in

Ethiopia

Clusters

Thank You

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