The Hindu Business Line : Scrap `import for exports' scheme, urges tea industry

THE South Indian tea industry sees no respite until the `import for export scheme' by the export oriented units is scrapped. The industry has been pleading with the Tea Board and Commerce Ministry for abolishing the scheme as it has had an adverse impact on tea exports.

Exports started to decline steadily from 207 million kg (mkg) in 2000 to 180 mkg in 2004. Imports increased phenomenally from a 9.86 mkg a few years ago to 30.52 mkgin 2004. Industry sources say that most of this comprised lower priced Vietnam teas, imported under the `import for export scheme.'

Tea price levels showed slight improvement in 2004 but the average loss still hovers around Rs 10 a kg.

The financial crisis began with prices falling from Rs 68.80 a kg in 1998 to Rs 57.10, Rs 44.60, Rs 46.02, Rs 41.62 and Rs 42.27 in the subsequent five years ended 2003. There was a mild recovery in 2004 to Rs 47.03.

During the current year, the average price has hovered around Rs 49. If the present trend continues, the industry is hopeful the average price to touch the Rs 50-mark, but is still doubtful if its fortunes would change for better in terms of export prices.

Industry sources attribute the marginal improvement in price levels to the drop in Indian production in 2004. The market, however, was not hit badly as it was more than made up by the increased production in other tea producing countries.

But what is troubling the industry is the imbalance in the production cost and tea price realisation.

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