Rs 5,000cr package for tea: Kamal Nath

The government Tuesday said it plans to implement a Rs 5000 crore re-plantation and rejuvenation package to boost the tea sector. The assistance will be spread over a 15-year-period, commerce and industry minister Kamal Nath said.

"We are looking at various schemes to upgrade and develop the country's tea plantation... I have special financial packages for the neglected areas," Nath told the Lok Sabha during question hour.

Detailing schemes under consideration, he said mass plantation, upgrading of market, product development, promotion of Indian tea aboard and human resource development for the tea sector are on the anvil.

"I have had detailed discussions with the chief ministers of the tea growing states and the members of parliament to solicit their views to implement the package," Nath said. He said "special support" would be given for the production of quality tea.

Voicing concern over India's declining market share in the global tea market, Nath said, "We have lost market share abroad. Our exports to Russia have declined after the fragmentation of the former Soviet Union. Cheap exports from Kenya and Sri Lanka have also pulled down our exports."

Tea exports in January fell 6.74 per cent on year to 12.87 million kilograms while production declined to 4.07 per cent at 19.07 million kilograms.

The fall in exports was largely due to lower purchases by countries like Libya, Iraq, and other major buyers of Indian tea.

He said the subsidy given to tea growers would have to be compatible with the World Trade Organisation norms.

Rather than focusing on subsidy, production cost has to be brought down to make Indian tea attractive for foreign buyers.

Nath said the government may grant transport subsidy to tea growers.

Stressing the government's concern for the sector, Nath said the Rs 80-90 crore mop-up as additional excise duty from the tea companies would be ploughed back to support the sector.

Last month, in the Budget for 2005-06, finance minister P Chidambaram announced withdrawal of the Rs 1 per kilogram additional excise duty on tea.

In 2003-04, the government abolished the Rs 1 excise duty on tea and replaced it with additional excise duty, also pegged at Rs 1 per kg.

The idea behind the abolition of the excise duty and putting in place the additional excise duty was to pump back the amount into the tea sector to strengthen research, give export incentives, and rehabilitate sick tea gardens.

Though the tea industry has suffered over the past few years, prices have improved by 15-20 per cent this year, Nath said.

According to the United Planters' Association of Southern India (Upasi), cost of tea production went up to Rs 60 per kilogram, while auction realisation was only Rs 46 a kilogram.

The tea industry thus lost Rs 14 for every kilogram of tea sold.

The minister said the Tea Board was also considering setting up a separate cell for small tea growers.