Tea faces import threat

The Indian Tea Association (ITA) has called for rationalisation of overhead costs, in wake of lower customs duty as part of the recently concluded SAARC summit.

Addressing the 126th annual general meeting of the Dooars branch of ITA, K K S David, vice-chairman of the association said, lowering of customs duty would fuel cheap imports.

"This is already happening in other sectors and tea certainly would not remain an exception. Therefore, the organised sector would have to look at new structures where fixed overhead costs were rationalised" he said.

Outsourcing of green leaf was already happening with a large number of estates buying green leaf both in Assam and West Bengal.

ITA was leading an initiative with the government of India to mobilise relief package for the industry.

Cost relief was being sought in the form of interest subsidy on working capital as has been done in the case of coffee and conversion of all types of loans into single term loan with a payback period of 13-15 years coupled with a moratorium for three years.

"Subsidies would provide a breather to the industry in the short and medium term. The long-term survival would however require looking at structural issues to rationalised cost of production" said David.

He added, the bought leaf sector (BLF) constituting 20 per cent of production base would continue to foster huge availability of teas in the Rs 35-50 range both from north and south India.

David pointed out that the organised sector in India faced the challenge of benchmarking its cost internationally with similar producers like Sri Lanka and the BLF in the domestic sector.

"Thousands of hecatres of tea areas in India are below the break-even yeild. Lowering the cost per hectare would require uprooting and replanting" he said.