The Bharat auction system, which has been flagged off in south India, will be implemented in north India only after conducting adequate number of mock sessions and consultation with stakeholders.

According to Saurav Pahari, Chairman, Tea Board of India, implementation of the Bharat auction system pan -India is a mandate given to the Board. However, it will be done only after proper consultation with stakeholders.

The Tea Board, had earlier this year, come up with the Bharath auctions which is expected to result in better price discovery, lower transaction costs apart from ensuring that the quality of tea sold through the system is good.

The new format replaces the old English system following a study undertaken by the Indian Institute of Management, Bangalore (IIM-B). The institute studied the old system closely and suggested the Japanese model for improving the price discovery mechanism and ensuring a robust system. “Be rest assured that nothing will be done without consulting all the stakeholders. There will be sufficient stakeholders’ consultation,” Pahari said at the AGM of Calcutta Tea Traders Association (CTTA) here on Thursday.

Better price discovery

According to industry sources, in the previous auction system, people were withholding bids till the last few seconds and that was preventing active price discovery. But under this system, that is likely to be eliminated thereby leading to better price discovery.

Uncalled for

However, a section of the industry has been apprehensive regarding this new system. “We have seen a sea change in the auction system — from manual auctions to electronic auctions in the last 125 years. While the electronic auction system has had its benefits, it has removed a lot of healthy competition due to the absence of manual participation. Now with the implementation of the Bharat auction, we will have to bid goodbye to the English electronic auction which in my opinion is totally uncalled for. After many years of practice and implementing careful and clinical changes and just when all the stakeholders had come to terms with the English e-auction, we are now being forced into another form of auction,” Anish Bhansali, Chairman, CTTA said at the AGM.

Bhansali further said that the last two years has taught all industry players that tea prices and fair price discovery has nothing to do with the type of auction or software it uses. It only depends on quality of produce, competition and the demand-supply dynamics. “We are one of the few industries which boast of a universal platform where all the produce finds its way to a central point of selling , the auction centres, which has been managed by yardsticks evolved to perfection over the years . I see no merit in hiring expensive consultants to decide how to sell our produce when we have many stalwarts in our industry who can do better as they have been part of the trade for so long,” he said.

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