Tea production up in India, but exports suffer

Kolkata, Feb 26: Despite a rise in India's tea production in 2006by an apreciable 28 million kgs, in comparison to last year, thecountry suffered in exports due to higher cost of production, IndianTea 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 inprice realisation in 2006, the levels remained lower by about Rs 12 perkg, 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 hasnot increased to keep pace with the increased availbility have resultedin problems associated with over supply.

COP in India has still remained the highest compared to othermajor tea-producing countries, severely affecting India's exportcompetitiveness.

To combat this situtions both the ITA and Tea Board have takenmeasures to revive the tea sector through initiatives for increasinginternal demand for tea, boosting exports to Pakistan and Egypt,restriction of further expansion of tea cultivation. Besides,replantation/rejuvenation, reduced cost of production and boostingorthodox 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 theCentre to extend the benefit of Focus Market Scheme (FMS) and FocusProduct Scheme (FPS).

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

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

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

Out of annual average of 200 M.Kgs tea exports, Asom accountsaround 70 M.kgs. Due to high cost incidence of inputs and taxes/levisIndian tea exports have been severely constrainted and the domesticmarket was unable to absorb the spill over resulting from decliningexports. Falling exports have led to serious demand-supply mismatchresulting in depressed prices, the ITA report said.

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

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