Agri Business

FDI cap easing: No significant impact seen in tea sector

Shobha Roy Kolkata | Updated on November 22, 2017

The move to hike foreign direct investment (FDI) limits in tea plantation may not have a significant impact on the, industry sources said.

The Centre has allowed FDI in tea plantations up to 49 per cent through automatic route and 49-100 per cent through the Foreign Investment Promotion Board route.

The Union Cabinet, had in 2002, allowed FDI up to 100 per cent in the tea sector through FIPB route but subject to a rider of compulsory disinvestment of 26 per cent equity of the company in favour of an Indian partner within a span of five years.

Interestingly, in the last 8-10 years there have been hardly any FDI investments in the tea plantation sector.

“Plantations usually do not figure on the priority list of any developed country. Infact a majority of foreign companies which had some holdings in plantations in India have eventually sold that and invested itelsewhere,” C.S. Bedi, Managing Director, Rossell Tea, told Business Line.

According to Kamal Baheti, Chief Financial Officer of McLeod Russell Ltd, the reverse trend — of Indian companies investing overseas — has been more in vogue recently.

“In tea plantations India is the leader. In fact Indian companies including that of ours have gone overseas to acquire assets. There has not been any activity from any overseas player to invest in plantations in India,” he said.

> shobha.roy@thehindu.co.in

Published on July 17, 2013

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