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The Centre is considering relaxing the pan-India tea auction rules to allow traders to purchase smaller quantities. The present minimum amount prescribed for buyers has made it difficult for small and medium traders to participate in the process.
The demand of tea buyers that proxy bidding be allowed in the auction process, however, has been rejected as the Tea Board, under the Commerce Ministry, is of the view that it could lead to cartelisation and influence prices.
“In our meeting with representatives from the industry, we discussed at length the problems that were being faced by traders after implementation of the new pan-India auction rules. While we think that their concern on the minimum lot size is valid, it is not possible to allow proxy bidding as it would go against the very concept of a pan-India auction and create cartels,” a Commerce Ministry official told BusinessLine .
The Tea Buyers’ Association, comprising industry representatives, met officials from the Tea Board on Thursday to sort out tricky matters.
The Tea Board will now hold meetings with the NSE.IT — the IT department of the National Stock Exchange, which is a separate company — to bring about changes in the auction process so that the minimum lot size is lowered.
“This is mainly a technical issue and we will sort it out,” the official said. Under the old system, at the Kochi centre, a single buyer could purchase a minimum lot of five bags and up to nine bags of tea; two buyers could buy 10-14 bags; three buyers could purchase between 15 and 34 bags, while four buyers could buy over 35 bags.
Under the new system, the minimum number of bags to be purchased by a single buyer has been increased to 20, while two buyers have to buy 40 and three buyers, 41 bags and above.
Tax issuesOn CST, Tea Buyers’ Association President Dharmendra Vora told BusinessLine the Tea Board had asked the association to approach the Kerala government for tax reduction to 1 per cent at the first point. “We requested the Chairman to take up the matter and will be following it up,” he said.
The association also requested the Board to give operational decision-making rights to each tea trade association with regard to day-to-day operational activities.
Asked whether the association would continue with the boycott of Kochi auctions in the wake of the meeting with the Tea Board, Vora said that a general body meeting would be convened on Saturday to decide on the matter.
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