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Monday, May 27, 2002

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Tea review meet tomorrow

G. Srinivasan

The meeting is also expected to address the issue of the utilisation of the funds available to profit-making tea firms under Section 33 AB of the Income Tax Act.


THE Union Government has convened a review meeting of the tea industry on May 28 as part of its medium-term strategy to pep up commodity sector which has been in the doldrums in recent months, following depressed prices across products.

The tea sector meeting, to be chaired by the Commerce Secretary, Mr Dipak Chatterjee, is being convened in the context of the decline in tea prices in major auction centres, reduction in the share of exports to Russia and the overarching need to harmonise the conflicting interests of traditional tea estates owned by major tea companies vis-a-vis the small tea growers backed up bought-leaf/cooperative tea factories, industry sources told Business Line here.

Official figures state that the country's tea export has been highly fluctuating during the last six years ranging from 169.04 million tonnes (mt) in 1996-97 to 211.26 mt in 1997-98, 205.86 mt in 1998-99 and 192.44 mt in 1999-2000. While tea exports touched a high of 203.65 mt in 2000-01, such exports were 140.79 mt during the first three quarters of 2001-02. The unit value realisation for tea export also fluctuated between the high of Rs 100.47 per kg in 1998-99 and Rs 93.01 per kg during the first three quarters of the last fiscal.

The meeting is also likely to focus on the Ferguson Report on the working of the auction system for many decades and the desirable changes to be brought about in the interests of producers, the buyers and the brokers.

The meeting is also expected to address the major concern of the Government on the utilisation of the funds available to the profit-making tea companies under Section 33 AB of the Income Tax Act. The allowance under the statute has been increased from 20 per cent to 40 per cent in the 2001-02 Union Budget.

The meeting would to be attended by the Chairman of the Tea Board and leading tea majors represented by Indian Tea Association (ITA), United Planters Association of Southern India (UPASI) and Tea Association of India (TAI).

The sources said important players as Hindustan Lever, Tata Tea should be proactive and play positive role in the auction centres and also in export promotion efforts to achieve the twin objectives of reasonably remunerative prices to the producers of all tea-growing regions in the country and arresting the decline in the country's share of export markets particularly the Russian Federation.

They, however, hastened to compliment the big tea exporters for their contribution in enhancing exports of valued added not only in traditional markets but also in the markets of Australia, the United States, Canada.

When contacted, official sources confirmed the scheduled tea review meeting and further stated that it is part of a series of review meetings the Commerce Ministry proposes to hold with the Commodity Boards comprising coffee, rubber, spices and other products.

Meanwhile, a status paper being made by tea major Hindustan Lever Ltd states that the domestic prices in the country have witnessed a drastic decline in 1999 and 2000 over the past and these low prices are continuing even now.

While the price drop over the three years is around 20 per cent on an average translating to Rs 15 per kg, it is almost Rs 23 per kg in South India and around Rs 11 per kg in North India.

It further contends that India's major export customer viz., Russia has been taking advantage of the increased world market offerings and has reduced its offtake of Indian teas, besides sourcing lower price tea from elsewhere.

It is surmised that the cost advantage of other Asian countries as China, Vietnam and Indonesia due to lower cost social and welfare infrastructure have let them gain entry into the Russian and other markets.

The paper suggests a host of measures to propel the tea industry into an era of sustained viability which include productivity improvement drives, cost effectiveness measures, marketing thrusts, generic promotion of tea and quality upgradation plans.

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