The finance minister Yashwant Sinha, in amendments to the finance billbudget proposals for 2000/2001 (April-March), proposed to raise customs dutyon tea and coffee.

The proposals must win parliamentary approval to come into effect. Indiacurrently allows coffee imports only for re-export, and officials at thestate-run Coffee Board estimate that the country imported about 2,000 tonnesin 1999.

Domestic sales of imported coffee will, however, be allowed when Indiaphases out quantitative restrictions and places coffee under Open GeneralLicence (OGL) in line with World Trade Organisation (WTO) obligations byApril 2001. porting coffee even at the presentrates (of customs duty)...nowit doesn't look like anyone will import coffee at all," Arun Bidappa, aleading coffee planter said.

Growers said the small volumes imported currently were robustas and mostlyfrom Vietnam. The imports were handled by global firms who processed theimported coffee in India and re-exported it as soluble coffee.

MA Bopanna, managing director of Consolidated Coffee Ltd, the country'slargest coffee grower and processor, said Indian coffee was cheaper even atthe current customs duty of 15 per cent.

"We have very few options to import... Latin American coffee is expensive,African coffee is suspected for diseases and Vietnam's quality is not asgood as ours. So that leaves only Indonesia out," he said.

With the latest hike in customs duty, firms importing coffee will be forcedto buy from within India, growers said.

India produces nearly 4 per cent of the world's coffee and exports about 75per cent of its output. The country is expected to produce a record 2,82,000tonnes in 1999/2000 (October-September).