Testing
times
To
identify a way out of the quagmire that the tea industry finds itself
in, Binny Sabharwal spoke to LV Saptharishi, Ex-Additional Secretary,
Ministry of Commerce
What
do you think are the reasons behind the current situation of the tea
industry, which is reeling under the problem of plenty and declining
exports?
The
tea industry in India has to become extremely competent in the global
scenario, the reason being that there are competing beverages, like
soft drinks, in the market today. Besides, the consumer has become highly
discriminatory and therefore the quality of tea matters a lot. There
is also a change in the spending patterns of the consumer as they are
ready to pay only a lower price for a better quality of tea, in other
words the concept of poor quality of tea for which you get a lower price
does not exist any longer, people want to pay lower price for higher
quality. So quality has becomes a high consideration, but the industry
is still compromising on this major requirement, which is required for
global competence.
Do
you mean to say that changing consumer preference is the reason for
the current crisis and not over- production and declining exports?
If
there is an over production you can always tackle it in terms of increasing
the per capita consumption of the product. For example, the quantity
of tea consumed per capita in a country like Pakistan is supposed to
be double of what is consumed in India. This means that we have to do
a great deal in the direction of increasing consumption of tea by our
population. This by generic proportions can be achieved by differentiated
marketing strategies at different levels of consumers and also by brand
promotion as the consumer is increasingly becoming aware of branded
teas.
Reports
say that outdated processing methods are also a reason for the poor
quality of tea. What are your views in this regard?
Technology and machinery upgradation is a part of the overall exercise
of enhanced productivity and imparting quality to this commodity. You
may be aware that at a recent meeting jointly chaired by the Finance
Minister and the Commerce Minister it was decided to permit the industry
to import any type of machinery from any part of the world, which will
help in the farm sector operations or for processing and manufacturing
operations and also for further value addition of tea. This includes
any type of machinery including tea bag making machines. Whatever the
tea industry has been demanding has been included in the list. Under
the scheme, the benefit will be available for 18 months, for bringing
in the machinery at an all inclusive interest rate of 5 per cent. That
is, the maximum duty that one has to pay to get these machines is 5
per cent. This should be availed of by the industry, which is always
complaining that it does not have access to these technologies and machinery.
What
about the grave humanitarian crisis that the tea industry is facing,
around 1,00,000 workers have lost their jobs and reports of destitution,
starvation and suicide are common?
What
is the government doing to tackle the situation? There are two aspects
to the problem – one is the social aspect where the government at the
state level has got to do a lot namely in terms of free or subsidised
ration, benefits of development programmes and other related measures.
The Government of Kerala has been very generous and forward-looking
in dealing with the problems of the workers affected due to the closures
of the tea gardens. Even in the case of Assam and West Bengal the State
Governments have done a lot to intervene and deal with the human aspect
of the social problem. But the workers also have to look at it in the
due context of declining profits of the company. In other words they
have to cooperate with the management for productivity-linked wages.
Now as far as the Central Government is concerned, in order to help
the small tea growers (area of 4 hectare and below), it has already
introduced a Price Stabilisation Fund scheme in September 2003. The
amount may be inadequate but it is a beginning. So if the participating
growers, the state governments and the boards cooperate with each other
there are methods of augmenting the size of the gardens, getting increased
yields and extending benefits to the workers.
Why
is the cost of production of Indian tea highest in the world and what
is the Government doing to control it?
We
have a lot of social obligations, which the other tea producing countries
do not have to bear. Traditionally, in the Indian tea gardens the management
had to provide and bear all the social infrastructure costs related
to its workers like medical, housing, roads and others. These costs
add up to a sum of approximately Rs 500 crore for the tea sector. The
other major tea producing countries like Kenya and Sri Lanka do not
have this specific problem.
A
committee earlier headed by me had delved into the issue and had suggested
that a part (50 per cent) of the social infrastructure costs be borne
not only by the Central Government but also by the state government
while 50 per cent of the costs should continue to be borne by the industry.
Discussions in this regard are still going on and I am sure a satisfactory
solution will be arrived at...
.....CONTD
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