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ITA explains 225-mkg tea export projection

Our Bureau

CALCUTTA, July 5

THE possibility of the entire increase in tea production being in the Orthodox category, likely amendments in banking procedures that will facilitate utilisation of the debt repayment route for exports to Russia and promotion plans for several outmarkets were kept in view by Indian Tea Association while projecting tea exports at 225 million kg (mkg) for the current year in its recently released status paper.

In a press note issued here in the context of observations that its status paper generated, ITA clarified that the export projection, in fact, was the target for the Indian tea industry and trade.

The output increase of 35 mkg (to 840 mkg from 805 mkg of 1999), projected to be entirely in the Orthodox category, would mean availability of exportable teas for the Orthodox consuming markets, such as, the Middle East and Russia.

Secondly, ITA has been given to understand by the Union Commerce & Industry Ministry that banking amendments are being expeditiously worked out between the Reserve Bank of India and Bank for Foreign Economic Affairs (BFEA) in Russia to facilitate utilisa tion of the debt repayment route.

The export projection is, in fact, conditional on Russia/CIS absorbing at least 100 mkg.

Plans have been drawn up for an aggressive export promotion by Indian tea producers and merchant exporters in certain thrust markets, such as, Iran, Iraq, UAE, the US, Jordon, Syria, Libra, Turkey and Russia. Tea delegations have already visited Turkey a nd some of the Middle-East countries as part of the overall export initiative.

ITA, the press note observes, is concerned over New Delhi's policy to allow tea imports from Sri Lanka at the concessional duty of 7.5 per cent ad valorem against the prevailing basic customs duty rate of 35 per cent. Its import projection of 10 mkg for 2000 is merely a reflection of the prevailing policy of the Centre and the relative price scenario, particularly in other tea producing countries.

It is, however, convinced that even the projected import level is influencing market sentiments and appears to be working to the disadvantage of the tea industry in South India, whose teas are directly in competition with Sri Lankan teas.

The position has become more vulnerable following the recent devaluation of the Sri Lankan currency. The adverse market sentiments are also affecting other tea growing regions in North India, such as, Terai, Dooars and Cachar.

In these circumstances, ITA sees a strong case for:

OWithdrawing the concessions extended to Sri Lanka in the form of preferential duty rate of 7.5 per cent and

O Enhancing the basic customs duty on tea to near the WTO-bound rate for tea of around 140 per cent.

The status paper envisages a surplus position of 11 mkg, even if the targeted export level of 225 mkg is achieved. It has reiterated that there neither can nor will be any shortage of tea in the domestic market and, therefore, the country's tea import p olicy must ultimately be shaped for the wellbeing of the domestic tea industry.