West Asia Crisis Intensifies Cost Pressures on Rubber Industry, Says AIRIA President
The ongoing West Asia crisis is exerting significant pressure on India’s rubber industry, driving up input costs, disrupting supply chains, and creating uncertainty across the sector, according to Anay Gupta, newly appointed President of the All India Rubber Industries Association (AIRIA).
In an interaction with DH’s Mrityunjay Bose, Gupta explained that the impact of the crisis is being felt largely through indirect but powerful economic channels, particularly the volatility in crude oil prices. Since synthetic rubber and several key petrochemical inputs are derived from crude oil, price fluctuations have led to a sharp increase in production costs for manufacturers.
“Volatility in crude oil prices has increased the cost of synthetic rubber and related petrochemical inputs, leading to higher production expenses,” Gupta said, adding that rubber remains an indispensable material used in a vast array of everyday products—from automotive components and industrial goods to consumer items—making the industry highly sensitive to such disruptions.
Beyond raw material costs, the crisis has also affected global logistics and trade routes. Disruptions in key shipping lanes have resulted in higher freight charges, longer transit times, and elevated insurance premiums. These logistical challenges have made it increasingly difficult for manufacturers to maintain steady supply chains and adhere to delivery schedules.
For a country like India, which relies heavily on imports for certain grades of synthetic rubber and petrochemical feedstock, these developments have translated into increased procurement costs and supply uncertainty. Currency fluctuations have further compounded the issue, as a weaker rupee makes imports more expensive, squeezing margins for domestic manufacturers.
Gupta noted that, in response to these challenges, companies are re-evaluating their sourcing strategies. Many are diversifying supplier bases to reduce dependence on specific regions and are maintaining higher inventory levels as a buffer against supply disruptions. However, these precautionary measures have their own consequences, including increased working capital requirements and tighter overall supply in the market.
“The combined effect of rising input costs, logistics disruptions, and currency volatility is putting upward pressure on prices across the industry,” Gupta said.
Industry stakeholders are now closely monitoring the evolving geopolitical situation, as prolonged instability in West Asia could further strain supply chains and cost structures. The sector is also calling for supportive policy measures to help mitigate the impact, including easing import duties on key raw materials and improving domestic supply capabilities.
Despite these challenges, Gupta expressed cautious optimism, noting that the industry has demonstrated resilience in the past. However, he emphasized that sustained volatility could slow down growth and impact competitiveness, particularly in export markets.
As the situation unfolds, the rubber industry remains on alert, adapting its strategies to navigate an increasingly complex and uncertain global environment.