Outline ofOutline ofA STUDY ON THE NATURAL A STUDY ON THE NATURAL RUBBER MARKET IN INDIARUBBER MARKET IN INDIA

bybyP.M.MathewP.M.Mathew

Institute of Small Enterprises and DevelopmentInstitute of Small Enterprises and DevelopmentISED House, ISED Road, Cochin -682 028ISED House, ISED Road, Cochin -682 028

Ph: 0484 2808171, 2809884 Fax : 2809884Ph: 0484 2808171, 2809884 Fax : 2809884E-Mail: ised@md2.vsnl.net.in www.isedonline.orgE-Mail: ised@md2.vsnl.net.in www.isedonline.org

BASIC FEATURES OF RUBBER BASIC FEATURES OF RUBBER MARKETMARKET

A high volatile marketA high volatile market

Highly regulated market until recentlyHighly regulated market until recently

High political sensitivity-large number of High political sensitivity-large number of dealers and growers-decides the dealers and growers-decides the economic geography of a Stateeconomic geography of a State

A Subject of ControversyA Subject of Controversy

Rubber futures is a controversial subject. Rubber futures is a controversial subject. Dealers, manufacturers and the Rubber Dealers, manufacturers and the Rubber Board have distinct positions.Board have distinct positions.

The ProblemThe Problem

To understand and analyse the rubber To understand and analyse the rubber market, especially derivatives market. market, especially derivatives market. The recent changes in the economy The recent changes in the economy demand an understanding of the demand an understanding of the relationships between spot and futures, relationships between spot and futures, price flexibility, and relationships price flexibility, and relationships according to the extent of the market .according to the extent of the market .

HYPOTHESISHYPOTHESIS

It is hypothesized that a futures market It is hypothesized that a futures market for natural rubber helps to reduce violent for natural rubber helps to reduce violent fluctuations in prices ,and thereby to fluctuations in prices ,and thereby to protect the interests of the majority of protect the interests of the majority of the participants in the marketthe participants in the market

Objectives of the StudyObjectives of the Study

To analyze the circumstances under which futures market was To analyze the circumstances under which futures market was introduced for natural rubberintroduced for natural rubber

To analyze the relationship between spot and futures markets.To analyze the relationship between spot and futures markets.

To analyze the price behavior in the spot and futures markets,To analyze the price behavior in the spot and futures markets, with reference to both the domestic and international markets.with reference to both the domestic and international markets.

To analyze the stake holder response to futures markets, with To analyze the stake holder response to futures markets, with specific focus on, manufacturers ,traders and the planters.specific focus on, manufacturers ,traders and the planters.

To study the effectiveness of various regulatory mechanisms, To study the effectiveness of various regulatory mechanisms, such as the Forward Markets Commission , and the Rubber such as the Forward Markets Commission , and the Rubber Board, in relation to commodity futures trading in the countryBoard, in relation to commodity futures trading in the country..

MethodologyMethodology

(a) Reviews and Discussions(a) Reviews and Discussions (b) Analysis of Secondary Data(b) Analysis of Secondary Data (c) Collection of Field Data, their analysis and (c) Collection of Field Data, their analysis and interpretation interpretation

1. Data from a representative sample of natural rubber dealers.1. Data from a representative sample of natural rubber dealers.2. Data from product manufacturers.2. Data from product manufacturers.

3. Case studies of large manufactures, dealers, and Commodity 3. Case studies of large manufactures, dealers, and Commodity Exchanges Exchanges

Importance of the StudyImportance of the Study The manufacturing industry, which was significantly dominated The manufacturing industry, which was significantly dominated

by the tyre sector, has undergone some diversification, thereby by the tyre sector, has undergone some diversification, thereby implying possible changes in consumption behavior in the implying possible changes in consumption behavior in the natural rubber market.natural rubber market.

While both the regulatory mechanism and the lobbying power While both the regulatory mechanism and the lobbying power of farmers and traders, were against natural rubber imports, in of farmers and traders, were against natural rubber imports, in the pre-liberalization era, this situation has changed recently.the pre-liberalization era, this situation has changed recently.

The relationship between synthetic substitutes and natural The relationship between synthetic substitutes and natural rubber has changed significantly in recent times.rubber has changed significantly in recent times.

The area under cultivation of natural rubber has grown , both in The area under cultivation of natural rubber has grown , both in terms of coverage and quantities.terms of coverage and quantities.

Scope of the StudyScope of the Study

The study is of an all-India nature. The study is of an all-India nature. However, the field research will be However, the field research will be confined to specific areas.confined to specific areas.