Hegde has dashed of a letter to Sinha, demanding withdrawal of the excise duty on small sachets of less than 25 grams, alongwith a duty reduction to Re 1 per kg on small packets upto 100 grams.

Indian tea exporters have been pleading for exemption on the grounds that the imposition of the duty would severely hurt their interests. "As it is, new tea exporting nations like Sri Lanka and Kenya have started capturing a large share of the global tea market, and this duty will only render Indian products uncompetitive", remarked a major tea exporter.

Meanwhile, a special action committee of secretaries (CoS) is monitoring the prices of tea on a fortnightly basis. India is the largest producer of tea in the world and accounts for 18 per cent of the world market and is closely followed by China and other new entrants including Sri Lanka andKenya.

"Prices of packaged tea would increase by nearly Rs 12, the finance ministry should therefore limit the duty to Rs two or three at the maximum, on packaged tea of 100 grams to one kilogram", he added.

Expressing fears that any increase in prices of tea would have a severe backlash, Hegde hinted that his ministry was also looking toward other measures for boosting tea exports. He warned that stringent action, under the Prevention of Food Adulteration Act, would be taken against violators who market "spurious" tea as the world famous Darjeeling variety.

Addressing media persons here, Hegde said the duty exemption was necessary in view of the adverse impact of the new excise duty. The minister said that the government had drawn up various schemes to increase tea production to 1,000 million kg by 2002.

Another important measure being contemplated by the commerce ministry is allowing tea planters to import tea packing machinery at zero duty. Other measures being contemplated to boost tea productioninclude the increasing cultivation of tea and provision of a Rs 10,000 per hectare subsidy to small tea planters.

The ministry has also drawn up plans to leverage the brand equity of Darjeeling tea by promoting logos for the four different types of Indian tea.Hegde felt that instead of closing down its overseas offices, the Tea Board should expand its operations by setting up sales promotion agencies.