Tea industry seeks sops to boost Orthodox variety

The tea industry, which has witnessed a near 25 per cent drop in exports in 2020 following the lower production of the orthodox variety, is urging the central government to announce some subsidy to boost the production of such teas.

The Indian Tea Association, in its pre-Budget memorandum, has requested for inclusion of the Orthodox Production Subsidy Scheme as well as other schemes of Tea Board under the purview of Section 10 of Income Tax Act, thereby making it eligible for exclusion from computation of total income. This would motivate producers to take up Orthodox production on a larger scale and help boost tea exports from the country.

“In order to increase tea exports, there is a need to augment Orthodox production. However, tea producers are hesitant to manufacture more Orthodox teas due to higher costs, low acceptability in domestic market and the increasing risk in the world market. The present subsidy level of Tea Board is inadequate to cover the wide cost differential between Orthodox and CTC varieties of tea,” ITA said. The present subsidy level for Orthodox production is ₹3 a kg.

It is to be noted that Orthodox tea accounts for less than 10 per cent of the country’s annual tea production, which is close to 1,300 million kg (mkg). However, nearly 90 per cent of the 110 mkg of Orthodox produced each year is exported.

TDS exemption

The tea industry has also urged the government to consider providing exemption from levying a TDS at 2 per cent on cash withdrawals in excess of ₹1 crore a year from bank.

“In view of the large workforce, wage payments in cash results in large cash outflows and almost all tea estates are attracting 2 per cent TDS on cash withdrawals. This is constraining the cash flow of tea companies,” it said.

Pursuant to the outbreak of Covid-19 with a view to provide financial relief, Central Board of Direct Taxes had reduced the TDS and TCS rates on several items which was applicable till March 2021. ITA has sought for continuation of the benefit of the reduced TDS for another financial year that is till March 2022. Also, it urged the

government to consider inclusion of tea among the notified crops under the Pradhan Mantri Fasal Bima Yojana.