How
green is the valley
Indian
tea exporters are facing a double crunch – loss of share in major markets
and inability to make significant headway in emerging markets, says
G Boriah
Currently,
the tea sector in India is assailed by a number of critical problems
like low price realisation, increasing cost of production and declining
exports. Value added imports and re-exports have been steadily increasing
and as a result net export by Indian companies is declining. The industry
is also beset with long-term problems like old age of bushes, and low
plant population per hectare. This implies neglect and low investment
in the 
gardens
during the years of prosperity. The sector has to collectively reflect
on this aspect and find urgent solutions if it is to compete with the
existing and emerging tea producing countries.
The
global scenario Tea is now grown in all the continents of the world
– in more than 32 countries spread over 2.5 million hectares. India
is the largest producer. The other major tea producing countries are
China, Sri Lanka, Kenya and Indonesia. These five countries themselves
account for 75 per cent of the world tea production and 80 per cent
of the world exports. A bulk of the tea produced globally is consumed
in the developing countries. The world trade in tea is going through
a significant change, while developed markets stagnate, growth is expected
in the developing countries. These markets are now expected to open
up substantially in the wake of the WTO regime. As a consequence, it
would inevitably bring about increased global competitiveness in the
areas of cost, price, quality, supply schedules, packaging, and market
focus and customer satisfaction. The overall tea situation in India
is quite different from that of other major tea producing countries
like Kenya and Sri Lanka. While these countries export as much as 95
per cent of their produce, in the case of India, nearly 75 per cent
of the total production is consumed within the country.
The
Indian industry
While
the physical area under tea cultivation has increased only by 61 per
cent between 1950 and 2001, the production in contrast has grown by
a staggering 206 per cent. The most significant growth is in the area
of domestic consumption. From a mere 73 million kg in 1951, the domestic
consumption has gone up to as much as 653 million kg in 2000 – an increase
of 795 per cent. The industry, over the last five decades, has tried
to remain vibrant and well prepared to face challenges. Vast resources
of skilled workers, competent managerial manpower, intensive research
and the regular introduction of modernised equipment have all contributed
to laying the base of a very sound and progressive industry.
Expansion
of area
In the recent past, several small farmers in Assam, North Bengal and
Bihar have switched over to tea cultivation. Because of this changeover,
the contribution from the small grower segment, which used to be around
5 per cent at the end of the Eighth Plan period increased to 17 per
cent by the end of the Ninth Plan period. In fact between 1995-99 substantial
area had been brought under tea by the small grower sector.
Key
imports
Import of tea, which began in a modest way in 1992-93, touched around
15 million kg in 2000-01 against average levels of 1-2 million kg in
the past. The unit CIF value of tea imported from a few countries was
lower than the prices fetched at Indian auctions. The quantitative restrictions
on the import of tea were removed from April 1, 2001. However, in order
to protect the domestic tea industry, the import duty has been fixed
at 100 per cent out of the ‘bound rate’ or a maximum leviable import
duty of 150 per cent. Currently, the import of tea not possessing adequate
licenses is permitted but such imports attract a basic import duty of
100 per and an additional excise duty. Further, under the Exim Policy,
import of tea is allowed without payment of import duty for the purpose
of re-export by EOU (export oriented units) and EPZ (export processing
zones) units. Nearly 98 per cent of....
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