In the wake of the challenges facing the Indian tea industry, the commerce ministry will consider the issue of withdrawal of central excise duty of Rs 2 per kg on bulk tea and discuss problems of the tea industry with the Russian president Vladimir Putin during his visit later this year.
This was stated by minister of state for commerce and industry Omar Abdullah at the 117th annual general meeting of the Indian Tea Association (ITA) yesterday.
The tea industry feels that, for exports to Russia, the commerce ministry should primarily consider some procedural changes in the mechanism of the rupee-debt repayment system in a manner which could facilitate more effective utilisation of exports.
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"I am aware that the industry is passing through a difficult phase and that the price decline has emerged as a major cause of worry for a large segment of the Indian tea industry," Abdullah said. He said promotion of tea in India and an aggressive targeting of exports would form the thrust of the industry's recovery during the current year.
It may be mentioned that the duty differentials introduced by the government of Russia for bulk and packaged tea have created some problem of access to the Russian market, which is the biggest market for Indian tea. .
With regard to the Tea (Marketing) Control Order, Abdullah said that it should be e-commerce friendly.
Addressing the gathering, ITA chairman R S Jhawar said that the advantage of the relief given to the tea industry by enhancing the import duty from 15 per cent to 35 per cent has been partly taken away as the preferential rate of import duty for Sri Lanka still continues to be 7.5 per cent.
Jhawar also pointed out that recent changes in the auction procedures could not satisfy all sections of the tea industry, which led to serious disruptions in the conduct of auctions.
In general, last year was quite a difficult year for the tea industry in terms of production and prices. While production was lower by 650 lakh kg, prices were down despite the decline in production. To add to the problem, costs of production escalated sharply.