FDI Inflows to Rubber Goods

Abstract:

Liberal policies have been adopted by the Indian government to boost FDI Inflows to Rubber Goods in India. 100% FDI has been allowed in this sector under the automatic route.

100% Foreign Direct Investment (FDI) is allowed in the rubber goods industry of India by the Indian government. This age old industry is an agro-product based industry. Realizing the tremendous scope of growth in this industry the government has adopted a liberal policy related to investments in this industry.

Some positive points for higher Foreign Direct Investment in rubber industry of India are as follows:

• Procurement of quality seeds and modern plantation process of rubber plants
• Procurement of machineries and technology transfer for extraction process of crude rubber
• Processing of rubber (vulcanization of rubber)
• India is the third largest producer of rubber with highest per hectare yield of around 1575 Kg
• High demand for special grades of rubber like ISNR-3 CV, ISNR-3L, ISNR-5 etc
• Cheap labor cost
• Large rubber cultivation area
• Huge requirements in the critical auto components industry
• Huge requirements in the Pharma-medico industry

Scope of FDI in rubber goods industry of India:

The scope of FDI in the Indian rubber goods industry has been rightly identified by some of the multinational companies. One such example is Goodyear. Goodyear is one of the international market leaders in manufacturing of tyres and has come up with two tyre manufacturing units near Delhi. Further, it has forged a joint venture with an Indian tyre manufacturer. Furthermore, it has also acquired the south India based Indian tyre manufacturing company - the South Asian Tyres. It has come up with an initial investment of US $ 12.3 million in the manufacturing and distribution process of tires in India. Moreover, it has aggressive plans of setting up of 300 modern tyre retail outlets across India.

Last Updated on 4/23/2011