The Hindu Business Line : A few things to cheer for plantations

THE Union Finance Minister, Mr P. Chidambaram's decision to withdraw the additional excise duty of Re 1 per kg on tea is expected to help the sector to reduce the cost of production, making it a little more cost-competitive in the global market.

The additional excise duty was imposed in 2003 to return the collected fund to the tea industry through an incentive scheme for increasing orthodox tea production.

Later, funding for the Tea Research Association was also earmarked from this fund. The Union Government has already collected Rs 120 crore and the Union Commerce Ministry is expected to announce the incentive scheme shortly.

The industry has welcomed the decision, as its high production cost has lead to an erosion of its export share in the global market.

Meanwhile, the proposed Rs 4,000-crore tea re-plantation and rejuvenation corpus has got a formal clearance from the Union Finance Ministry with Mr Chidambaram's announcement in the Union Budget.

The matter has been discussed by the industry, the Union Government and the banking sector for over a few months. The industry welcomed the announcement and expects it to have a long-term impact.

Re-plantation of tea bushes is supposed to begin this year and continue till 2020. At the end of this period, the average age of Indian tea bushes is expected to come down to 50 years from the present level of 85 years.

However, there are several hitches in the proposed fund. The industry has sought an interest rate below the prime lending rate. The banking sector, apparently, is unwilling to accept this. Several rounds of discussions will be needed to a get a final picture of the proposed re-plantation and rejuvenation corpus.

COIMBATORE: The plantation sector is overwhelmed by the Finance Minister's "positive" response to the industry's demands on the withdrawal of additional excise duty on tea and the announcement of the massive re-plantation and rejuvenation of tea plantings.

The President of the United Planters' Association of South India (UPASI) President, Mr Anil Kumar Bhandari, said the removal of additional excise dutyAED of Re 1 per kg of tea would go a long way in bringing down the cost of production of tea. The re-plantation and rejuvenation of tea bushes, the UPASI President said, would address the productivity issue and enable the plantations to compete in the world market.

UPASI is now planning to take up the issue of renegotiating the high interest rate on old loans in the lines of the Budget proposal for the sugar industry.

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