* India's Rubber Board expects higher rubber demand

* Says rubber demand in India poised to exceed U.S. demand

* Indian auto sales up 26 pct annually in August

Indian rubber consumption in the year to April 2010 is seen at 881,000 tonnes, slightly higher than the previous estimate of 875,000 tonnes helped by higher demand for automobiles, the country's Rubber Board said.

Rising demand in the world's third-biggest consumer of rubber behind China and the United States is expected to make India a bigger player internationally, Toms Joseph, an economist with the state-run Rubber Board, told Reuters at a conference on Monday.

We are ready for a very prominent position in the world by becoming the second-largest consumer of rubber soon, he said.

Joseph said domestic demand was picking up after a relatively modest rise of 1.2 percent in the year ended March 2009 due to the economic slowdown.

There had been visible signs of recovery in rubber consumption from February, Joseph said, adding domestic demand had risen by 2.1 percent to 376,350 tonnes during the first five months of the year that began from April.

The chairman of the Rubber Board, Sajen Peter, said the economic slowdown had not hit the commodity as much as feared.

In fact, the impact of the slowdown has not been as serious as perceived by many. Tyre and automobile sales have bounced back sharply and the demand is quite buoyant now, Rubber Board Chairman Sajen Peter told Reuters over phone from Bangalore.

India's car sales in August rose by a quarter from a year earlier, signalling strong demand for the festive season, which usually boosts sales of several commodities from edible oils to gold. [ID:nBMB008488]

Stronger local demand may not boost imports significantly, as local production was also rising and tyre firms ship in rubber duty free on the condition that final products made of imported commodity should be exported, Joseph said.

Analysts say large automobile tyre manufacturing firms such as MRF (MRF.BO), JK Tyres (JKIN.BO) and Apollo Tyres (APLO.BO) import tax-free rubber when international prices drop below domestic rates to cater to their export markets.

If we if try to see production and import figures of the last five years, 99 percent of the domestic production has been consumed within the country. I do not see any problem in meeting any rise in demand, Joseph said.

He said rubber output in India, the world's fourth-biggest producer, was expected at 867,000 tonnes in the year to April 2010, up from 864,500 tonnes in the previous year.

Production was expected to rise due to the efforts initiated by the government to replant old rubber trees, Joseph said.

Many plantations in India date back to the British colonial rule before 1947, and ageing trees have become less productive. (Editing by John Mair)