The United Planters Association of Southern India said Friday that it has tied up with the Multi-Commodity Exchange of India to start trading in tea futures. |
"We have entered into an agreement with MCX to start futures trading in tea. MCX will soon put tea on its menu for futures trading," Upasi President Anil Bhandari told Crisil MarketWire. However, he did not give the exact date as to when trading in tea futures will be launched. |
Upasi has formed a separate entity""Upasi Commodity Exchange Ltd.""to carry out trading in tea futures on the MCX platform. |
"We have already got the licence from the Forward Markets Commission (FMC) to begin futures trade in tea," said Bhandari. |
In India, commodity exchanges are governed and regulated by the Forward Contracts (Regulation) Act and Forward Markets Commission is the regulator. |
Upasi got the licence for trading in tea futures about a year ago, but it took some time to put the system in place, Bhandari said. |
The licence expired last year, but it has been renewed now. |
Upasi, the only organisation in the country to get a licence to carry out the trade, has the distinction of being the first planters' body to get the FMC nod. |
"Usually, trade bodies get the licence for such contracts," he said. |
India is the world's largest producer of tea, but the sector has gone through a rough patch in the recent past as the cost of production has gone up to Rs 60 per kilogram, while realisation at auctions is about Rs 46 per kg. The tea industry loses Rs 14 for every kg of tea sold. |
Upasi has asked the government to withdraw the additional excise duty of one rupee per kilogram on tea and also exempt the commodity from the 2 per cent education cess in order to give a fillip to the sector. |
In the overseas tea markets, India is facing competition from countries like Sri Lanka. India's tea exports grew marginally by 2.3 per cent to 177.55 million kgs in 2004, compared with 173.68 million kgs in 2003. |