Sell through GTAC to enjoy concessions: Assam govt

The Assam govt is visibly displeased at the loss of revenue despite the tea companies enjoying subsidies and incentives in the state

What can be termed as a veiled-threat to big tea companies, Assam government today said it was mulling withdrawing incentives and subsidies for those tea companies and factories that were by-passing Guwahati Tea Auction Centre (GTAC) and auctioning finished Assam tea at Kolkata Tea Auction Centre (KTAC) or shipping tea outside the state through stock-transfer and selling privately. However, the tea industry has rubbished the minister's warning and said the Assam government should rather doll out more incentives to woo buyers to come to Guwahati to take part in auction process.

The Assam government is visibly displeased at the loss of revenue despite the tea companies enjoying subsidies and incentives in the state.

"You are taking thousands of hectares of our land, enjoying various tax incentives and subsidies of our government and then you by-pass GTAC, it's very unfair. We are mulling to withdraw subsidies and incentives for those tea companies which by-pass GTAC and also would make sure they don't enjoy any incentive in future as well," said Pradyut Bordoloi, Assam's industry minister and also the chairman of GTAC. Bordoloi even went to the extent of saying that the state government would persuade the central government to withdraw centre-sponsored tax incentives to the tea companies which don't auction bulk of their produce at GTAC. How far such action of the government would have legal standing is, however, unclear as Bordoloi himself admitted that tea companies have right to sell tea anywhere they wish to.

"It is a very serious issue. On the one hand tea production in Assam was increasing but on the other hand auction of tea at GTAC is decreasing. We even charge less tax for sale of tea at GTAC as compared to the tax charged at KTAC by West Bengal government. We even offer Rs 6 rebate of per kg of tea being exported from Inland Container Depot (ICD) at Amingaon (near Guwahati). We will surely take action against those tea companies in future," added Bordoloi. He said he has already dispatched letters to tea companies asking them to mend their ways. The revenue loss due to by-passing of GTAC by few tea companies was around Rs 20 crore for Assam exchequer in the last fiscal.

Assam's total tea production in the year 2012 was around 588 million kg and GTAC handled only 27 per cent while KTAC handled around 20 per cent of Assam tea."Few tea companies by-pass GTAC because KTAC attract more buyers. Many buyers do not want to come down to Guwahati. There are many limitations, including logistical, geographical, insufficient warehouses, time factor etc. The Assam government, rather than coming down hard on the tea companies, should look for means to attract more buyers for GTAC. Rather than talking of withdrawing incentives, I feel the government should offer more," said a senior representative of tea industry to Business Standard.

He added: "What's my feel is that the minister is just playing to the gallery, as no government can all of a sudden withdraw subsidies and incentives for few factories only because they don't sell all or part of their produce through GTAC. Has the Assam government forgotten the amount of employment that tea industry generates in the state?"

Bordoloi said the state government would soon come up with an 'integrated' tea park in Lower Assam which would have all "modern facilities" including rail and road connectivity, auction centre, residential complex. The park would be spread across 500 bighas of land and would come up in three years time from now.