Reduce import duties on tea to improve quality of domestic produce

Protection to domestic tea planters has led to sharp decline in quality, while prices are going up

2 min read Last Updated : Apr 12 2019 | 10:52 AM IST

Over the years, the tea packaging industry in India has witnessed turmoil. Input quality of raw materials has seen a sharp decline, yet prices reach an all time high with every passing auction. One of the leading causes of this phenomenon is the ‘protection’ that the tea gardens and planters enjoy through high import duty on imported teas (100 percent import duty, along with an additional 4 percent countervailing duty).

Teas sourced from international origins, such as Kenya, China or Argentina, have similar or better taste profile than some of the Indian origin teas. Further, teas from these origins can be soured at a 25 percent to 40 percent discount when compared to Indian origin teas (despite shipping and transportation costs). However, the high import duty restricts access to such teas into the Indian market thereby providing the Indian tea plantations a competition free environment to operate in.

Facing stiff competition among themselves, the plantations in Kenya, Argentina and China have invested millions of dollars to improve their yield, enhance irrigation systems and replant tea bushes in order to keep prices low and maintain superior quality to their competitors. However, this spirit of continuous improvement is not adequately present among majority of the tea plantation companies in India.

The tea packaging industry in India is eagerly looking forward to an elimination of all import duties on imported teas in order to give us access to better and more competitive input raw materials from around the world. This will allow us to offer higher standards of products to the Indian consumers, at a price that is much more affordable than today.

Given that India is predominantly a tea drinking nation (market size of Rs 10,000 crore), with parts of rural India depending on tea for sustenance, such a move will be highly welcomed by the nation at large.

Sumit Shah is the executive director of Madhu Jayanti International Limited