The Goodricke Group Ltd, the country's third largest tea producer, has expressed concern over imports of Lankan tea at a concessional duty of 7.5 per cent.

Lankan tea, produced at lower costs, will eat into the domestic market which will hit the already shrinking domestic sector, company managing director Krupakaran David said.

The government has imposed an import duty of 70 per cent on tea but, Lankan tea commands a mere 7.5 per cent duty because of the Saarc agreement.

"Many countries will take advantage of this loophole," David said. "Tea growers in China and Vietnam will route their tea crop via Sri Lanka, which will repackage their teas and send it to the country at a concessional duty," he added.

The initial post-Budget euphoria has died down and the industry has not been provided with a concessional rate of borrowing from banks nor has there been a cut in central excise, which at present stands at Rs 2 a kg.

These were some of the recommendations made to finance minister Yashwant Sinha in various pre-Budget meetings he held with the tea industry, he said.

The output, David said, has fallen by 30 million kg this year, due to the increase in fertiliser prices by 24 per cent caused due to the partial withdrawal of fertiliser subsidy and a hike in labour wages that rose 36 per cent.

"This sector pays Central and state taxes and employs over one million people. Competition has not only come from cheap overseas imports but also from the cola giants, who have caused a further dent in our already depleted marketshare."

The tea industry has finally woken up to competition and is gearing up to launch a generic campaign where tea would be promoted as a health drink. Around Rs 16 crore would be spent on the generic promotion over a period of three years.

The per capita consumption of tea in the country stands at a mere 600 g compared to one kg in Pakistan. Due to the huge stockpile, tea production in the country was stopped during December.

In the export arena, Indian tea too has been subjected to a severe beating.

"The Indian Tea Association's export target of 225 million kg in the 2000-2001 fiscal was down by 28 million kg. As per global trends, we will be concentrating on orthodox brands and are looking at increased exports to Russia, Pakistan and the UAE," he added.

"We are trying to lower costs but being such a labour intensive industry, it is very difficult to drastically prune workforce. The industry has to fight together or survival will become difficult," David said.

(21/03/2001) Business Standard

Planters today demanded that tea and coffee imported for re-export could be brought into custom duty net, as there was neither any value-addition nor substantial foreign exchange earnings. In a pre-exim policy memorandum, submitted to the Union commerce and industry minister, growers have demanded the application of customs duty to their import for re-export and its increase to the bound rates level of 150 per cent, president, United Planters Association of South India, E K Joseph, said. He said the very concept of value-addition in plantation commodities was meaningless. For instance, he said, it was not possible to add any value to coffee, which was imported as "green beans". The import for re-export was equivalent to exporting our competitors' products with no minimum value-addition requirement in export oriented units which affected the country's own market.

Joseph said low grade and cheaply priced beverages from Indonesia and Vietnam were also finding their way to domestic market and available in Kochi. He expected the trend to accelerate, once quantitative restrictions (QRs) were lifted next month, as any person could get an advance licence for import to re-export and later market the produce in the country itself. Southeast Asian tea was imported at Rs.25 per kg against a selling price of Rs.50 for south Indian tea, while their coffee was priced at Rs.20 per kg against Indian robusta being sold at Rs.30-35 per kg. Joseph said taking into account this price differential of domestic and south-east Asian beverages, the present total import tariff of 74 per cent and a counter veiling duty of Rs.2.30 was not enough to protect the domestic industry. He said, given the plantation exports of over Rs 4,500 crore, despite depressed prices the industry needed more tariff protection at least in the short term after the QRs were lifted.

(15/03/2001) Business Standard

The Tea Board is toying with the idea of forming a separate forum of major buyers, exporters and planters under its aegis. NK Das, chairman of the board said, "A meeting will be held towards the end of this month and a decision will be taken thereafter." Severe undercutting in some foreign countries is one of the main reasons behind the idea.

"The image of Indian tea must be improved specially in a huge market like Russia", explained Das. Exports to Russia in 1999 were 88 million kg, a gain of 6 million kg over 1998. "There are some forums, but they are not so effective", said Das. It is likely that the budgetary allocation for the tea sector would also go up from Rs 49 crore to Rs. 55 crore for 2001-02. The Rs.49 crore last year included Rs.17 crore-price subsidy. "The jump in budgetary allocation would not only take care of the subsidy but also backlog of subsidies. It would also give a fillip to the various development and promotional programmes of the board", Das said. The Indian Tea Association (ITA) is also considering to form a forum for merchant exporters. Das also said that the ministry of commerce would be ploughing in around Rs 3.5 crore for the generic promotion campaign being initiated by the ITA. The Association has estimated a cost of Rs.16 crore for the campaign over a period of three years. However, Das added that the primary objective of the producers should be to improve quality, work towards better productivity and improve packaging.

(15/03/2001) Business Standard

COIMBATORE, March 12 Asia Pulse - Tea prices in India were between Rs 2 to Rs 4 lower at the Coimbatore tea auction despite strong demand, trade sources said.

Though there was good export demand for CTC leaf, prices could not move up, following certain limit fixed by importing countries, they said.

While prices of orthodox leaf quoted between Rs 2 to Rs 3 per kg lower, they were down by Rs two to Rs four for dust, the sources said.

The best quality CTC leaf ranged from Rs 60 to Rs 63, medium quoted Rs 53 to Rs 55, while orthodox leaf best quoted at Rs 6 to Rs 62 and medium at Rs 56 to Rs 58 per kg.

Prices fluctuated between Rs 56 and Rs 60 for best grade dust, it ranged between Rs 45 to Rs 62 for medium, they said.

(PTI)

12.03.2001 Asia Pulse