The Hindu Business Line : Export units allowed to sell more ‘instant tea’ locally

New Delhi, May 25 In a boost to the domestic tea vending industry, the Government has allowed export-oriented units (EoUs) to sell more ‘instant tea’ in the domestic market to meet the growing demand in the country.

There is a strong demand for instant tea due to increased consumer preference for convenient, instant food and beverage products.

The Commerce Ministry has now increased the cap on EoU sales of ‘instant tea’ in the domestic tariff area (DTA) from the existing 20 per cent of free-on-board value of exports to 30 per cent. This will improve availability of ‘instant tea’ for tea vending industry, which has been importing (instant tea) from Sri Lanka and other foreign markets, say industry players.

So far, instant tea has largely been exported by tea majors including Tata Tea, Hindustan Unilever and Nestle.

The ‘instant tea’ exports have recently seen some slowdown due to a decline in export orders on account of the appreciation of the rupee against the dollar.

However, the domestic tea vending industry, valued at about Rs 400 crore, has been growing at 35 per cent compounded annual growth rate (CAGR) in the recent years, say industry observers.

“This is a progressive step. It will not affect the domestic tea industry as EoUs are still not permitted to sell tea (instant tea excluded) in the domestic market. The tea growers will continue to be protected. The cap should have been raised to 50 per cent as available for a number of products”, industry sources said.

In fact, seeing the growth prospects for this industry and also its employment creation potential, the Finance Minister, Mr P. Chidambaram, had in Budget 2008-09 announced full excise duty exemptions on tea/coffee pre-mixes.

Currently, EoUs are permitted to sell up to 50 per cent of their free-on-board (f.o.b.) value of exports in the DTA. There are, however, exceptions to this norm. The EoUs are not allowed to sell motor cars, tea (excluding instant tea) and alcoholic beverages in DTA.

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