Tea sector urged to cut overheads

Chairman Indian Tea Association (ITA), Dhanuka said that the organised tea industry will have to look at new structures, where fixed overhead costs are rationalised.

Dhanuka was speaking at the annual general meeting of the Assam branch ITA.

According to him, the bought leaf factories (BLF) sector constituting 20 per cent of production base would continue to foster huge availability of teas in the Rs 30-35 range both from north and south India.

Further, lowering of customs duties arising from agreements at the recently concluded SAARC summit would fuel imports from wherever cheaper alternatives were available.

In this context, Dhanuka emphasised the importance of overhauling the cost structure prevailing in the organised tea sector.

Dhanuka also said that the Indian Bank Association (IBA) package for the industry would help the industry to tide over its current financial problems.

"Subsidies would provide a breather to the industry in the short and medium term. Long term survival would however, require looking at structural issues to rationalise cost of production" he said.

The Tea Board and the government of India recently announced a subsidy scheme for the small growers.

"A price-sharing formula is also in place to ensure a sustained price discovery for the small growers. The relevant schemes detailing the mechanics of operation are awaited" said Dhanuka.

The industry had also approached both state governments of Assam and West Bengal to put a stop to further expansion of tea areas.

"The West Bengal has already initiated steps in this direction. I would urge the Small Growers Association and government of Assam to pragmatically consider this issue in the overall interests of the industry at large and the workers it employs" said Dhanuka.