The Hindu Business Line : Upasi concerned over sharp increase in tea imports

THE substantial increase in imports of tea at a time when some turnaround has been noted in tea prices has become a cause for concern for the tea industry in the country.

According to the latest information, tea imports during January-August stood at 17.83 million kg (mkg) compared with 5.47 mkg during the corresponding period last year, registering an increase of 225 per cent.

Speaking to Business Line, Mr Anil Kumar Bhandari, President, UPASI, said: "If this trend continues, there will be arecord tea imports into India - estimated to be around 25 mkg, the previous highest being 22 mkg imported during 2002. Another disturbing trend in the import scenario is low unit value at which the teas are imported into the country".

The import unit value during January-August is only Rs 45.91 per kg compared with Rs 63.86 per kg reported in the same period last year. "I feel this a matter of great concern for the tea sector in general and South Indian tea industry in particular".

According to him: "One plausible reason for the increased tea imports perhaps could be to take advantage of Indian brand image in the international markets".

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.

Further, in the context of revival of global demand, certain segments in 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 29.78 per kg compared with the average unit value of imports of Rs 45.91 per kg and importantly quantum of tea imported from Vietnam accounts for 55 per cent (9.8 mkg) of the total imports".

During January-July, 86.7 per cent of the total imports was re-exported.

He said imports for re-exports had two implications. First, re-exporting substandard teas in the guise of Indian tea would tarnish the image of Indian teas in 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. There has also been misuse of this facility. In this regard, we suggest that the Commerce Ministry may undertake a comprehensive and commodity-wise studies, 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. In other words, this policy should be commodity-specific, instead of being across-the- board," he said.

In the world of globalisation, one way to address this challenge of increasing imports is by increasing our own exports from the current levels of around 175-200 mkg.

In the changed global environment, the importance of regional and bilateral agreement cannot be wished away.

The case in point is export performance of Kenya in tea under COMESA. Statistics reveal that Kenyan exports to Egypt and Sudan (COMESA countries) had increased by 71.2 per cent and 26.2 per cent respectively. Taking cue from this success, India should also pursue in making SAFTA a reality.

Mr Bhandari feels that "we should address our product mix, which is skewed in favour of CTC tea whereas the global demand is for orthodox teas".

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