The Hindu : Kerala News : Tea industry in dire straits

Online edition of India's National Newspaper
Monday, Jul 19, 2004

Kerala

Kerala

Tea industry in dire straits

By K. Venkiteswaran

KOCHI, JULY 18. It is the fourth year in running that the plantation sector in Kerala is going through a bad patch and in spite of reopening some of the estates in the High Ranges, the going continues to be bad for the labourers and the planters alike.

Capital erosion, unemployment and debts are some of the fallouts of the crisis and the sector was left high and dry even in the Union Budget where no fresh policy initiatives were forthcoming to bail out the ailing industry.

The planters have for long been demanding the abolition of the additional excise duty on tea by which there are no direct revenue implications to the Government as it has already been transformed to a separate fund.

The only sop in the Union Budget was the announcement of including more machinery in the list of machineries allowed to be imported at a concession of all-inclusive import tariff of 5 per cent.

As per figures made available in Parliament, over 28,000 workers have been rendered jobless due to closure of 55 tea gardens in West Bengal, Kerala, Assam and Tripura during the last three years.

The Government has made it known that it was not planning to restrict the sale of tea through auctions.

To rev up the tea sector, a sub-committee had recommended mandatory sale of 100 per cent tea through auction, introduction of electronic trading, tightening of auction system to prevent proxy bidding, review of sampling norms, opening of new auction centres and grant of interest subsidy on bank finances.

Industry sources here point out that tea industry in South India is reeling under one of its worst ever crisis on account of non-remunerative prices due to the hanging surpluses caused by severe disruption of its export markets.

Due to lopsided Government policies, the cost of production had overshot the realisation price and as an immediate remedial measure, the additional excise duty on tea of Re. 1 per kg must be withdrawn, the United Planters Association of South India had pleaded recently. It had also wanted infusion of fresh capital to the plantation industry at 7 per cent without any restrictive provisions.

Tea industry had been going though a crisis because of the tumbling prices and mounting production costs. Last year was disastrous for the tea sector as prices dipped to Rs. 30.44 per kg compared to Rs. 41.62 per kg in the previous year.

The average prices in the estate sector were only Rs.45.50 per kg whereas the average cost of production is estimated at around Rs. 63 per kg.

In the Union Budget of 2003-04, excise duty of Re. 1 per kg was abolished but in its place an additional excise duty was introduced for creating a separate fund for development and modernisation and rehabilitation of the tea plantation sector.

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