Abstract:
The objective of the study is to analyse the impact of NR price
hike on micro and small enterprises in the non-tyre sector of the rubber
products manufacturing sector during the economic reform period from
1991. The study looks also into the process of transformation in the
non-tyre sector of the rubber goods industry during the economic reform
phase. The rubber goods manufacturing industry includes an advanced
technology based and large capital owned automotive tyre sector and
predominantly labour intensive, technologically primitive and small
capital based non-tyre sector. The products in the non-tyre sector,
particularly the latex based segment, is manufactured with natural rubber
accounting for more than 60% of the cost of production. The viability
of non-tier products from the micro and small enterprises are contingent
on the price of NR. During the economic reform phase in India, the
price of NR became volatile with a sudden spurt during the first half of
1990s and a prolonged trough period from 1997 to 2002, followed by
a steady hike in price from2003.The upward movement continued, to a
great extent, till 2012. The hike in NR price has destabilized the micro
and small peasant industries, particularly in the non-tyre sector. It is
concluded that micro and small enterprises of the rubber goods industry
have been largely eliminated from the market rendering a large chunk
of the workforce jobless. The institutional mechanism to intervene in
the crisis of the small producers is fragile and inadequate. Transformation
in the rubber goods industry has resulted in the concentration of market
for rubber goods in fewer and large enterprises. In a situation of market
concentration in a few hands, the market for NR may turn into a buyers’
market dominated by a few large enterprises like automotive tyre
corporations, which would in turn augur doom for a million of submarginal
and marginal NR farmers in India.
