• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Reshma Krishnan

THE tea industry was somewhat happy with Budget 2002-03. The valuation of majors such as Tata Tea and Goodricke improved on the back of the cut in excise duty to Rs 1 per kg and the hike in the import duty to the industry-preferred level of 100 per cent.

However, many of the industry demands, such as the amendment to Section 33A of ??? and the plea to reduce the corporate tax rate to 30 per cent, were not addressed.

The Finance Minister raised the import duty from 70 per cent to the industry-sought 100 per cent; this is still below the WTO bound rate of 150 per cent. Last year, aided by a lower global price, domestic traders imported larger volumes of tea compared to the previous year; teas were available for Rs 58 a kg against Rs 63 the previous year.

But the Tea Board points out that 14.6 million kg of the 14.7 million kg imported were re-exported; though there is some consolation that only a small volume of the imported tea entered the domestic market, this did affect India's exports.

As such, the higher import duty came as a definite relief to tea majors.

On the excise front, the benefits were partial. Tea producers were hoping for a cut in the excise duty and the abolition of the Rs 2 per kg cess. This issue was partially addressed; the excise duty was reduced to Rs 1 per kg.

At a time when it costs Rs 60 to produce one kg of tea and the average price stands at Rs 53 in South India and Rs 60 in the North, even a one rupee reduction makes a difference for the beleaguered tea producers.

Send this article to Friends by E-Mail

Stories in this Section
Tea — pale and watery

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line