Higher domestic production could reduce imports by the world's second-biggest consumer of the commodity and help arrest a rally that has lifted overseas prices to their highest in more than five years.
The state-run Rubber Board has set an output target of 654,000 tonnes for the current fiscal year ending on March 31, up 16.4 percent from the previous year. The industry expects the output to rise another 100,000 tonnes in the following financial year.
Despite the now rising local output, Indian tyre companies will still have to import as there is about a 40 percent gap between demand and domestic supply, according to Industry sources.