CALCUTTA, Mar 19: The recent relaxation of one of the conditions guiding the import of tea for re-export purposes has come as a complete surprise to the industry, which is now trying hard to gauge the reasons behind the move.The producers anticipate that this dilution, which allows the sale of 30 per cent of imported tea in the domestic tariff area, may pave the way for larger quantities of tea import in the future.
The tea industry will take up the issue at their general committee meeting, which is likely to be scheduled on March 26. The policy has been reviewed by the commerce ministry in consultation with the tea board. Industry sources say they were completely unaware of the Board's views on the subject.
Top industry sources said that the modest beginning on sales of imported tea comes at a time when Indian tea production and exports are at their best.
The present move appears to be a repeat of their efforts in 1995-96, when the government had to retreat following massive protests by theindustry to introduce imported tea in the domestic tariff area.
The import of tea for re-export purposes is guided by four conditions: there must be a 40 per cent value addition, the tea must be blended with Indian tea, it must be re-exported only in packet form; and the te cannot be sold in the domestic market. The last condition has, however, been relaxed with the government allowing the sale of 25 per cent of imported teas in the domestic market apart from 5 per cent export rejects as well.
The industry is not dismissive of the present move, but feels that it does have a right to get an explanation. They surmise that the present import liberalisation could be due to a handful of reasons, which ultimately appear fragile as far as logistics are concerned.
It has been done either as a knee-jerk reaction to high domestic prices of tea -- the common man's beverage. It could also be a sop to export-oriented units which have shown modest growth in the last six years, they said.Industry sources say that therelaxation, if prompted by the need to curb domestic prices, is unrealistic as packeted tea is always a costlier proposition involving considerable value addition. This, in turn, cannot be seen as a commonman-friendly move. Loose teas are definitely a better option.
Secondly, Indian trading volumes have been at their highest this year, with exports touching the 180 million kg mark and production levels crossing the 800 million kg figure.
Lastly, if the move was motivated by a desire to make export units more viable, it is definitely consumer-driven as the Indian tea drinker will have the option to choose between Indian tea and imported varieties.
The industry's contention is that the government is shying away from promoting aggressive export marketing and thrust to packed tea and instead opting for unwarranted moves.The present relaxation will initially operate for a period of six months with effect from January 1, 1998, to June 30 on a trial basis. According to an industry watcher, it is difficult toascertain what exactly the commerce ministry will monitor to see whether the move is a success or not.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
