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| 'We expect higher allocation in this year's Budget' | | Q&A: Basudeb Banerjee, Chairman, Tea Board of India |
| Nayanima Basu / Jan 17, 2010, 00:26 IST |
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 The Indian tea industry faces issues of modernisation, financing and stagnant exports to key markets. BASUDEB BANERJEE, chairman, Tea Board of India, talks to Nayanima Basu on expectations for the year ahead. Excerpts:
Is the Tea Board concerned over the minimal progress of the Special Purpose Tea Fund (SPTF)?
The mega uprooting and re-plantation scheme funded from SPTF was initiated to address the issue of falling productivity due to the old age of tea bushes in India. The average rate of replanting before the introduction of SPTF hovered around 1,800 hectares per annum, or roughly around 0.5 per cent of the tea area. The targets contemplated earlier were ambitious, raising the rate of re-plantation four times.
The average area replanted annually during the past three years works out to about 4,000 hectares, which is a little more than double the rate of replanting observed during the past three decades. This is a significant increase. The replantation of old bushes is a capital-intensive operation with initial loss of crop over several years. As the industry had passed through a long recession period, from 2000 to 2006, the rate of replantation could not be higher. Having consolidated their respective financial positions with the present higher primary prices, it is expected that the industry will be in a position to take up large-scale replanting in the coming years.
The budgetary allocation for 2009-10 for the sector was substantial. Have you been able to channelise the money properly towards modernising the sector and improving the lives of workers?
The sanctioned outlay for 2009-10 for the tea sector was Rs 130 crore, of which the Board had received Rs 125 crore by the end of December 2009. The expenditure incurred by the end of 2009 was Rs 123 crore, a utilisation of 98 per cent.
Of the total expenditure, 31 per cent was used for development activities such as new planting, replantation, rejuvenation, creating of irrigation and drainage, transportation facilities and support to the self-help groups of small growers. Another 20 per cent was used for modernisation of tea factories, value addition, quality certification and incentives for orthodox tea production. About 16 per cent was used for R&D, 14 per cent for market promotion and 3 per cent on welfare and training programmes and the rest on miscellaneous support measures.
What are your expectations from the upcoming budget?
The allocation for 2010-11 has not been finalised. However, it is anticipated that this would be well above that for 2009-10.
The industry has been asking the government to bear part of the social cost (of modernisation). The proposal has been pending for many years.
This issue has indeed been flagged by the industry over the past years. However, the government had decided to have this issue, and the larger issues relating to the competitiveness of the industry, examined by a committee headed by former Union Commerce Secretary SN Menon. This committee has since given its report and the matter is being examined.
What steps are you taking to boost export?
A major boost was provided with the announcement in the Foreign Trade Policy that tea would be included in the Vishesh Krishi and Gram Udyog Yojana. The government has also introduced a scheme for assisting tea exporters in meeting the additional transport and handling charges. Specific plans are also underway to promote Darjeeling, Assam, Nilgiri and Kangra teas as Geographical Indications in overseas markets. The campaign for Darjeeling tea has already started, with protection and promotion in the place of origin.
The export of Indian tea during 2008-09 was 190.6 million kg, earning Rs 2,381.8 crore. It is expected that exports during the current financial year (2009-10) will be around 175 million kg, due to lack of demand from the traditional markets of the US, EU, Germany and Russia. Also, this year domestic demand had been robust, so exporters were tempted to sell more products in the home market.
The Tea Board had launched e-auction as an option over a year ago. How far has it has been successful?
Live e-auction (parallel with physical auctions) started in April 8, 2009, at the three South Indian auction centres of Coonoor, Coimbatore and Kochi; physical auctions were since discontinued. Partial e-auctions began at Kolkata and Guwahati auction centres from May, while the Siliguri centre introduced e-auction in June. Guwahati also has 100 per cent e-auctions since January 5. Only Kolkata and Siliguri continue to have partial e-auction at present, but are expected to go 100 per cent electronic by April 1.
Electronic auctions have been extremely successful, with over 130 million kg already sold through this route till December 31. Both pre- and post-auction activities have become streamlined as a result. Registered buyers are able to bid from remote locations, which will add to the buyer base and work against collusion and other distortions in the auction system. The software designed by NSE.IT, a subsidiary of National Stock Exchange, has proved very effective.
What is the status of closed tea estates?
Till April 2007, out of a total of 1,600 tea estates, there were 33 closed tea gardens spread across West Bengal, Kerala and Assam. However, with the improvement in tea prices in the past two years, as many as 21 gardens have been reopened and only 12 remain shut, of which five are in Kerala and seven in West Bengal.
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