The Hindu Business Line : Upasi opposes mandatory tea sale through auctions

THE United Planters' Association of Southern India (Upasi) has taken strong exception to the proposed move by the Tea Board to introduce 100 per cent mandatory sale of tea through auctions.

In a memorandum submitted to the Union Commerce and Industry Minister, Mr Arun Jaitley, here recently, the Upasi President, Mr B.B. Mediah, said that while the association has hailed the initiative of the Government in the reform of tea auction systems as per the Fergusson Report, Upasi is totally opposed to the proposal to introduce 100 per cent mandatory sale of tea through auctions.

"Any such move towards curtailing the freedom of the producers on the marketing front" would be vehemently opposed, he said adding that tea supplies were plentiful and a surplus situation has arisen. Prices were at rock bottom levels and producers do not want to be held captive at auctions by the buyers, he added.

"There is no rationale and justification for producers being compelled to sell through auctions at Rs 30 and Rs 40 per kg, when the cost of production is Rs 60 per kg," the memorandum noted adding that producers should not be denied the opportunity of selling bulk tea directly in the retail market and benefit from the higher consumer prices.

It said Upasi has got an in-principle approval from the Forward Markets Commission to set up and run the country's first tea futures exchange. As setting up of an exchange entails large investment on software and hardware, the Government might sanction a one-time grant of Rs 85 lakh for setting off the futures in tea.

The memorandum has drawn attention to the Government's export-import policy, which allowed duty-free import of commodities for re-export, without stipulating any significant value-addition norm. For instance in the case of tea, such imports have grown by leaps and bounds from just 1000 tonnes in 1992 to 22,000 tonnes in 2002 and this had cut into tea exports. Hence, for the present, a minimum value-addition norm must be prescribed for such imports, which should be equivalent to the import duty prescribed for the same commodity.

In this context, the memorandum cited the case of pepper import and the recent decision by the Commerce Ministry to allow duty-free import of Sri Lankan pepper into the country under the Indo-Sri Lankan Bilateral Agreement. It said the extent of import of pepper from Sri Lanka into the country is now quite substantial which is almost equal to the total production of Sri Lankan pepper.

Stating that the duty-free import of Sri Lankan pepper into India is being misused, the memorandum noted that peppers of other origins such as Indonesia, Vietnam land in India for domestic consumption in the guise of Sri Lankan pepper with importers obtaining false certificate of origin from Sri Lanka.

The extent of full exemption from duty is substantial compared to the normal import duty of 70 per cent, which the importers in the country would have to disburse for Indonesia/Vietnam pepper.

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