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Tea sector reeling under pressure as rising import a concern: UPASI

6 Jul 2021 11:35 am
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As per UPASI’s estimates, tea imports rose sharply by 139.36 per cent to 5.96 million Kgs a during January – March period of the current year. This was 2.49 million Kgs during the same period of last year.

Import of tea during the calendar year 2020 was estimated at 23.40 M.Kgs as against 15.85 M.Kgs in the previous year, an increase of 47.63 per cent. Import of increased quantities are reported mainly from Kenya, Nepal and Vietnam. The domestic tea sector has been witnessing increasing cost of production due to high input wage cost. According to Prashant Bhansali, President, UPASI surge in the inward shipment of the commodity will be a serious threat to this sector.

On the other hand, tea export had taken a hit as evident from the decline in the quantity exported and the value realised. For instance, tea export was lower by 42,430 tonnes in 2020 and declining trend continued during the first four months of 2021. As per the UPASI estimate total export during January – April period was 57.97 M Kgs as against 61.13 M Kgs in the same period of last year, registering a fall of 5.17 per cent.

He opined that tea is an important agro industry that employs 2.12 lakh growers and 11.65 lakh workers, of which more than 70 per cent are women. Interestingly, 50 per cent of the production in the country comes from the small grower sector. T

he plantation commodities including tea were exposed to international competition since April 2001, when the quantitative restrictions were lifted as per the commitments under WTO. The signing of the ASEAN Agreement in 2009 had further opened up the Indian tea market to the plantation producing countries like Indonesia and Vietnam.

Under the ASEAN Agreement, the import duties were gradually reduced since 2009 for tea and the current import tariff for ASEAN countries is 45 per cent . Import of tea from Nepal under SAFTA attracts nil duty.

Bhansali suggested that the central government should closely monitor import of tea and also implement provisions of Tea (Distribution & Export) Control Order 2005, wherever necessary in order to tide over the present crisis especially in the midst of Covid pandemic.

Though, there was some recovery expected on the export front, the shortage of containers, especially food grade containers and increased freight charges had turned out to be an obstacle for plantation exports including tea from India. This has resulted in an increase in the transaction time and cost, leading to a considerable delay in completing the export formalities.

In the midst of the crisis, the non-payment of Merchandise Export from India Scheme (MEIS) from 1st April 2020 and discontinuation of the scheme itself from 31st December 2020 without any new incentive scheme in place, had added woes to the existing distressed situation.

Though, the Government had announced that RoDTEP Scheme would be implemented with effect from 1st January 2021, the rates for the plantation commodities are yet to be finalised. The exporter’s factor in export benefits/rates while quoting the prices to the overseas buyers.

Any mid-way changes to the export incentive scheme without even finalising the incentive rates under the new scheme would put the exporters into tremendous difficulty. The lower budgetary allocation for the export incentive scheme in the Union Budget 2021-22 is also a matter of concern, Bhansali added.

Price trend

During January – March period diminishing trend prevailed in the major tea auction centers of the country, but the latest trend indicate some improvement in the centers in the North. At Kolkata auction average price for CTC dust and leaf on 2nd January was 187.04/Kg which dropped to Rs 145.91 on 27th March, according to Tea Board data. Similarly, Guwahati auction recorded Rs 164.08 on 2nd January and Rs 157.20 on 3rd April. Siliguri auction moved on a narrow range between Rs 168.57 and Rs 169.16 in the same period.

Meanwhile, leading southern markets Kochi and Coimbatore recorded the same dropping trend during January – March period. According to latest data auction markets showed a reversal on the price front especially in Kolkata, Guwahati and Siliguri. On 26th June Kolkata reported Rs 238.82/Kg, Guwahati 230.82 and Siliguri recorded Rs 203.53. Contrary to this, Kochi quoted Rs 124.42 and Coimbatore quoted Rs 110.82.

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