The tea industry has urged the Finance Ministry to continue with the orthodox subsidy scheme for sustaining exports.

In a pre-Budget memorandum to the Finance Ministry, the Indian Tea Association (ITA) said the subsidy scheme had helped in correcting the product-mix and enabled the availability of more orthodox variety.

The association said the Tea Board under the Commerce Ministry was yet to release the subsidy amount for 2008-09. In this context, it said the subsidy backlog for 2008-09 and 2009-10 be released, so that producers were encouraged to continue production.

The association noted that the consultancy firm appointed by the Tea Board had advocated continuance of the subsidy scheme for the balance of the 11th Plan period as well as during the 12th Plan period.

It also said the concessional duty on specified tea machinery items be reduced from 5 per cent to zero for a period of three years starting April 1, 2011. This would make the Indian tea industry competitive globally, he said.

Referring to Section 33AB of the Income Tax Act, ITA said migration to the proposed Direct Tax Code should contain provisions of the section.

The section requires that tea companies set aside a certain portion of the profits in good years for deployment in development activities in bad years. It allows for a deductible allowance of up to 40 per cent of pre-tax profits.

ITA has also called for sharing of social costs incurred by tea companies. It suggested that the Government should evolve a suitable mechanism, whereby the high social costs were substantially mitigated.

It had also suggested that the high security costs incurred by the gardens in Assam due to insurgency be also shared by both the state and Centre.

Related Topics