The Hindu Business Line : Special purpose fund to revive tea industry

The Special Purpose Tea Fund (SPTF), which has received the Cabinet Committee of Economic Affairs' nod, will help launch the biggest-ever productivity intervention programme by the Union Government, in close collaboration with the Tea Board, to lift the tea industry's fortunes, severely dented since mid-1999 owing to both senile tea bushes and depressed auction prices.

The programme will be funded through margin contributions from growers, subsidy from Central Government and long-term loans. At present, bank finance to the tea industry is mainly through short-term lending.

Mr Jairam Ramesh, Union Minister of State for Commerce, told Business Line the scheme would help raise yield, lower cost of production significantly and improve quality, leading to higher price realisation for the tea industry. The SPTF will raise the required long-term funds from the banking sector through a structured borrowing mechanism.

He said the re-plantation and rejuvenation-pruning programme, which includes capital contribution from the Government to SPTF for raising the required funds through long-term loans, was targeted at the organised sector (which produces 80 per cent of all tea) comprising about 1,600 tea estates spread over 4 lakh hectares.

The Government's contribution towards capital adequacy ratio of the SPTF has been re-worked at Rs 91 crore, and no Government guarantee would be provided.

The estimated total area to be replanted and rejuvenated over a 15-year period is said to be 2.13 lakh hectares, and of the total area, 46 per cent is in Assam, 28 per cent in West Bengal, 22 per cent in South India and the rest in other tea-growing areas. The total estimated cost is Rs 4,761 crore - Rs 4,360 crore on re-plantation and Rs 401 crore on rejuvenation.

SBI Capital Markets and Pegasus Advisory Services, which have actually conceived and developed the fund, will help in management, monitoring and supervision of the fund.

Stating that the scale of re-plantation and rejuvenation was proposed to be increased 6 and 4.5 times respectively of prevailing levels, the Minister said fund availability would be ensured through both long-term loans and subsidy.

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