Centre to ensure success of tea e-auctions

The Tea Board of India, functioning under the administrative control of the commerce ministry, had launched an e-auction of tea in 2004 but failed to take it forward.

Union Commerce Minister of State Jairam Ramesh said this time the government will ensure the mechanism does not fail. Although running e-auction does not involve much added cost, the Centre will initially meet the recurring expenditure for running the day-to-day auction mechanism. At a later stage, the e-auction will be run with the buyers’ and sellers’ money, as in the case of normal auctions.

The Tea Board on Thursday entered into an agreement with NSE.IT Ltd for preparing and installing the systems. Ramesh said the e- auction would run on a trial basis from August to October from six centres — Kolkata, Siliguri, Guwahati, Cochin, Coonoor and Coimbatore— and it would function in full capacity from November.

He said the government wants to pursue e- auction for tea, as this would “ensure a fairer price discovery mechanism”.

“It’s high time the tea industry is sensitised about the benefits of future contracts,” Ramesh said.

However, no quantity of tea has been fixed for sale through the e-auction. Ramesh said India produces a total of around 970 million kg of tea, of which 45 per cent is auctioned. The amount to be sold via the e-auction will depend on the amount of production and the market response.

Tea industry representatives feel there will be difficulties in designing future contracts, as tea production is dependent on the vagaries of nature, making it difficult to guarantee the quality and quantity at the time of delivery. Meanwhile, the cabinet committee on economic affairs (CCEA) has approved a Rs 230 crore five-year scheme for quality and product upgradation.