India has officially launched a rubber plantation project covering 200,000 hectares over five years in its Northeastern states, with an investment of 11 billion rupees (USD 150.5 million). The initiative, led by the Automotive Tyre Manufacturers Association (ATMA), began implementation in June 2021.
Ambitious Rubber Expansion Plan
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In its first year, the project will plant around 10,000 hectares, a modest start due to the COVID-19 pandemic and limited availability of planting materials sourced mainly from Kerala, India’s largest rubber-producing state.
In addition to popular varieties RRII 105 and RRII 430, the RRIM 600 variety — known for its wind resistance — will also be cultivated.
ATMA has committed to providing financial support of 50,000 rupees (USD 685) per hectare, either through credit-linked financing programs or direct payments for planting materials.
Boosting Rubber Productivity and Supply
The project includes quality improvement programs aimed at increasing yield and output from newly planted areas. It is expected to revitalize India’s rubber production, which has stagnated between 600,000 and 700,000 tons in recent years due to low prices discouraging farmers from tapping rubber trees.
Since late 2020, rubber prices have rebounded, reaching a seven-year high of 170 rupees (USD 2.33) per kilogram for grades used in tire manufacturing. The price recovery, combined with renewed plantation efforts in Kerala, helped boost India’s rubber output by 0.4% to 715,000 tons in fiscal year 2021.
Strategic Economic and Logistical Benefits
Most tire manufacturing plants are concentrated in Western and Southern India, which currently depend on rubber supplies from Kerala.
To reduce logistics costs, waterway transport is being considered as an alternative distribution method.
However, rubber product factories (non-tire) in Northern India are expected to benefit the most, as proximity to the new Northeastern plantations will significantly lower their transportation expenses compared to sourcing rubber from Kerala in the far south.
Shifting Production Away from Kerala
Rubber production in Kerala has declined in recent years.
According to the Association of Planters of Kerala (APK), output dropped by nearly 15% between 2010 and 2020, falling to 534,000 tons in the 2020 fiscal year. The state’s rubber area also shrunk by 8% over the same period to 551,000 hectares.
Although Kerala still accounts for 67% of India’s total 822,000 hectares of rubber plantations, productivity has fallen as many plantations have entered their fifth or sixth replanting cycle. Combined with rising wages, production costs in Kerala are now between 170–175 rupees (USD 2.33–2.40) per kg, compared with just 52 rupees (USD 0.71) in Tripura.
Focus on the Northeast: India’s Emerging Rubber Hub
Given these conditions, India’s rubber board and ATMA have decided to shift focus to the Northeast, where rubber cultivation already exists in all states of the region.
The Northeast currently accounts for 23% of India’s total rubber production, led by Tripura with over 10% market share, followed by Assam.
The total rubber area in the region stands at 160,000 hectares, and the new project aims to expand this significantly, transforming the Northeast into a major rubber production zone for India’s tire and rubber industries.