Commerce ministry plans e-auction of tea

In a bid to overhaul the price discovery system of tea through a transparent mechanism, the Ministry of Commerce and the Tea Board of India have put together a design document for e-auction.

Jairam Ramesh, minister of state for commerce, said the joint draft paper was put up to invite comments from different stakeholders.

The consultation process is expected to end by November. The key stakeholders in the auction process are auction organisers, tea producers and sellers, tea brokers, buyers and warehouse keepers.

One of the key features of the proposed system would be the anonymity with which the members would transact on the system. The information will be available through central auction engine for all participants.

The idea is to let tea be judged on the basis of quality and not by transacting parties. One of the drawbacks of the existing auction system is that it fails to ensure anonymity of the bidder.

The draft paper also calls for an overhauling of the price discovery system. The proposed system would provide transparent prices for the auctions conducted.

One of the two auction methodologies, respective price and single price, could be used for the purpose of automatic matching of bids.

In the existing auction system, there is less time for price discovery due to display of a number of lots for bidding at a time. The new system has proposed that the concept of lots be dispensed with.

Ramesh said, "Once the consultation process is over, a software designer will be appointed. The initial validation of software will be completed by April, and by September the software will be in place."

He added that the idea was not to impose it on stakeholders by way of legislation.