The Hindu Business Line : Tea industry worried over rising imports; Vietnam major supply source

TEA imports during January-April this year have increased by over 25 per cent compared with the same period last year, causing concern to the domestic tea plantation industry.

According to Upasi, imports during January-April 2005 stood at 5.72 million kg (mkg) as against 4.52 mkg a year ago.

There was a substantial increase in imports in 2004 with the country importing 30,522 tonnes valued at Rs 139.43 crore as against 9,859 tonnes worth Rs 57.51 crore in 2003.

Significantly, Vietnam has become the major source of supply with 17,279 tonnes at the unit price of Rs 32.56 a kg.

Other major suppliers were Kenya, Nepal, Indonesia and China.

Imports from Vietnam topped the list during January-April also with 1,804.57 tonnes at a unit price of Rs 36.52 a kg, while that from

China has surged to 721.37 tonnes (at Rs 37.33 a kg) from 108.92 tonnes in the year-ago period.

Shipments from Kenya, Indonesia and Nepal during this period had shown a decline.

The industry has attributed the drop in auction prices to increased availability tea of foreign origin at low prices in the domestic market.

"It is a matter of great concern for the tea sector in general and the South Indian tea industry in particular," Mr Anil Kumar Bhandari, President, Upasi, told Business Line.

The low import price is indeed a matter of concern, particularly in the context that significant quantum of tea imported into the country is meant for re-exports.

Imports for re-exports has two implications: First, re-exporting sub-standard teas in the guise of Indian tea would tarnish the image of Indian teas in the international market; and second, import for re-export would result in additional pressure on supply position in the domestic market, as otherwise this tea could have been exported.

"It is in this context, Upasi has been advocating for fixing a minimum value addition norm for re-exports," he said.

As Indian teas are well known in the international market for its quality attributes, the low quality tea producing countries might be taking advantage of duty-free routes (import for re-export) to drain their surpluses, he said.

Further, certain segments in the trade may also be taking undue advantage of duty-free routes to source the low priced teas and blend it with Indian teas for re-export as Indian tea.

For instance, unit price at which teas are imported from Vietnam is only Rs 36.52 a kg during the current year (January-April) compared to the average unit value of imports of Rs 50.38 a kg.

There has also been misuse of this facility. In this regard, "we suggest that the Commerce Ministry undertake a comprehensive and commodity-wise study, to find out the extent of additional foreign exchange earned in respect of each commodity during the last five years and retain the system only for those commodities, which have earned significant additional foreign exchange," he said.

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