Comments
Is Guwahati Tea Auction Centre (GTAC) losing importance as a public tea auctioning centre and gradually turning into a venue for private sales? The question haunts many in tea industry today. Not without reasons though.
Between 2011 and 2012, the volume of private sales (shown as deemed auction) in GTAC jumped from 11.29 million kg to 36.73 mkg. During the same period, volumes under public auctioning dropped around 2.7 mkg to 122.97 mkg.
What causes concern is that private sales are ultra vires of relevant provisions of Tea Board’s TMCO (Tea Marketing Control Order) 2003. Tea Board issues licences for holding auction to promote public auctioning. This is because unlike public auctioning where there is competition, private sales are not transparent, lack competition and therefore proper price realisation is not possible under such deals.
The rise in private sales also restrict competition in the public auctioning system as big buyers corner large quantities through such sales thus preventing proper price realisation.
In 2012, the average price realisation at GTAC was Rs 133.49 a kg compared to Rs 151.30 at Kolkata. The corresponding figures for 2011 were Rs 109.88 and Rs 113.12 respectively.
The implication can be serious for the State’s tea industry. The tea buyers will shun GTAC which is already happening now. The GTAC Chairman, also a Minister in the State Cabinet, complains of inadequate support from tea industry. Only around 21 per cent of 588 mkg of tea produced in the State is offered in GTAC for public auctioning, it is pointed out.
The crux of the problem, according to tea industry sources, lies in Assam Government’s gazette notification of May 21, 2012, reducing VAT. For sale through GTAC’s public auctioning mode, the rate was reduced from one per cent to 0.5 per cent while that through private sale mode from two per cent to one per cent. Thus the VAT differential between the two modes was reduced to 0.5 per cent from earlier one per cent, giving boost to private sales.
At Kolkata auction, on the other hand, the differential is three per cent, with auction mode attracting VAT at one per cent and private sale four per cent. At Kolkata, only around 4-5 per cent of the offerings are for private sales against 35 per cent at GTAC. No wonder the bulk of tea offered for public auctioning at Kolkata originates in Assam.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.