Tea production up in India, but exports continue to suffer

Kolkata, Feb 26 (UNI) Despite a rise in India's tea production in 2006 by an apreciable 28 million kgs, in comparison to last year, the country suffered in exports due to higher cost of production, Indian Tea Association has said.

Tea production had touched 956 million kgs in 2006 in contrast to 928 M.kgs of last year, an ITA report said.

The report said that although there has been some improvment in price realisation in 2006, the levels remained lower by about Rs 12 per kg, when compared to that of 1999.

Over supply of tea and combined pressure of higher production- lower exports, higher imports, and the fact of internal comsumption has not increased to keep pace with the increased availbility have resulted in problems associated with over supply.

COP in India has still remained the highest compared to other major tea-producing countries, severely affecting India's export competitiveness.

To combat this situtions both the ITA and Tea Board have taken measures to revive the tea sector through initiatives for increasing internal demand for tea, boosting exports to Pakistan and Egypt, restriction of further expansion of tea cultivation. Besides, replantation/rejuvenation, reduced cost of production and boosting orthodox tea production to get a better share in the world tea market, the report said.

ITA, in order to boost export of Indian tea, has requested the Centre to extend the benefit of Focus Market Scheme (FMS) and Focus Product Scheme (FPS).

In Pakistan, the third largest tea importing country in the world, India faces a disadvantage because of zero duty allowance to countries like Bangladesh, Nepal, and others. During the last interaction with the Pakistan Tea Association, the Indian side had suggested an "Indian Blend" for Pakistan and linking of rail route from both North and South India with Karachi.

On the Asom scenario of tea, the state produced 438 M.kgs of India's total production of 956 M.kgs in 2006, the ITA suggested waiver of green leaf cess on tea exports from Asom.

The report said the cess on green leaf production under the Assam Taxation (on Specified lands) act worked out to about Rs 1,46 per kg of made tea, which was the direct cost to the producers. This cess levied at a point of time when the tea industries in Asom had been doing well. The industry has since then seen continued decline in prices and spiralling effect of inflationary cost pressures.

Out of annual average of 200 M.Kgs tea exports, Asom accounts around 70 M.kgs. Due to high cost incidence of inputs and taxes/levis Indian tea exports have been severely constrainted and the domestic market was unable to absorb the spill over resulting from declining exports. Falling exports have led to serious demand-supply mismatch resulting in depressed prices, the ITA report said.

ITA has requested the Asom government to consider total waiver of green leaf cess or a moratorium of cess for three years or a waiver of cess on that part of production contributing to exports.

UNI