The Hindu Business Line : `Promote Indian tea as that with a conscience'

PROBLEMS of the tea industry have almost become perennial. Annual production has stagnated at around 850 million kg (mkg). Export markets are shrinking and prices in the auction houses unremunerative.

Resolving these problems and turning the fortunes of the tea sector is a Herculean task. The Tea Board, being the nodal Governmental agency under the aegis of the Union Commerce Ministry, always bears the brunt.

After serving as the deputy chairman of the Tea Board from July 1998 to June 2003, Mr Basudeb Banerjee returned to the organisation in October 2005. Talking to Business Line he discussed the various aspects of the industry.

Excerpts.

You have returned to the tea industry after almost two years. What changes have taken place in the last 20-odd months?

The export basket of the Indian tea has changed. Earlier, Russia and Poland used to be the major importing countries. Though Russia is still the biggest buyer of our teas, the share has dropped. Poland, nowadays, is hardly buying tea from us. Exports to Iraq have almost come to nil. On the other hand, exports to Pakistan have increased. It is likely to go up further. The Tea Board is planning a trip to Pakistan.

On the global production front, China has become a major player. Today, they are producing almost 850 million kg, which is equal to our production. Vietnam's production has jumped to 95 million kg. So, there is a structural change in the total tea industry.

However, poor prices had persisted. Last year, there were some corrections but it was for a short time only. The industry is maturing. It is learning to keep its cost of production down. As a result, price realisation is improving.

The best thing to happen to the Indian industry is the compulsory checking of imported teas, which are meant for re-exports.

Imports of inferior quality of teas have dropped. It would also help us in improving the brand image of Indian teas.

What steps will the Tea Board take to turn around the sector's fortunes?

While the organised sector is suffering from high production cost, the bought leaf sector, which manufactures almost 20 per cent of the total national production, is unable to produce good quality.

In the next five-year Plan, we are considering two things. First, we will advise the small growers and the bought leaf factories to concentrate more on quality. They have the advantage of low cost of production. If they succeed in upgrading their quality, then their teas would earn a good price.

For the organised players, we are contemplating a paradigm shift in the marketing strategies. We will try to send a message across to all the global buyers that Indian tea producers take care of their workers. There is no point in crying hoarse over our high production cost. Instead turn it into a marketing advantage. We may say that Indian teas are the teas with a conscience.

Which are the new export markets targeted for Indian teas and what steps are been taken to garner more share in those markets?

If one studies the export pattern of Indian teas, it will be found that the European markets are slowing down despite the fact that the UK is still a major importer. The US is fast developing as a major importer but for speciality teas.

Similarly, markets in West Asia, Pakistan and parts of central Europe are emerging as important markets for us.

For some time now, there were talks of amending the Tea Marketing Control Order (TMCO). What is the latest status?

Yes, we have sought suggestions and views from all sections of the industry. These suggestions are expected to reach us within the next few weeks. Once, we get it we will study and prepare our report. Accordingly, we will forward our suggestion for the proposed amendment.

We feel that there is a need for a change of the five per cent premium for the division of lots.

Is Tea Board getting all the statistics from the producers and dealers, as stipulated in the TMCO?

We are hardly getting the information. TMCO has given us enormous powers. Time has come to crack the whip and we may have to do just that.

There is another problem too. The producers need to submit at least four sets of documents to various agencies of the Government.

These are excise, sales tax, VAT (value added tax) and to the State Government for green leaf cess.

We are trying to bring about a co-ordination among all these agencies.

What is the latest status on the Special Tea Protection Fund?

The Union Commerce Ministry has already prepared the necessary papers and it has been forwarded to the Planning Commission.

The commission has sought some clarifications. The process is on. It will take some time but the in-principle decision has been taken.

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