ITA submits white paper on Darjeeling tea to WB govt, highlights challenges

The Indian Tea Association (ITA) has submitted a white paper on Darjeeling tea to the West Bengal government demanding intervention from both the state and central government to revive the local tea industry, which it said was not just an economic asset, but a cultural heritage too.

 

Senior officials from the association met West Bengal’s labour minister Moloy Ghatak on Tuesday and handed over the white paper.

 

The paper suggests several interventions, fiscal and non-fiscal, to revive the industry and urged the state and central government to consider the submissions.

 

Unless the industry is revived through strategic interventions and associated financial support, the already threatened existence of the industry on which the livelihoods of more than 55,000 permanent workers and 15,000 temporary workers along with their families are dependent will continue to be under acute stress, the paper mentioned.

 

Fiscal and non-fiscal interventions

 

The fiscal interventions being sought by the industry include conversion of working capital deficits of tea borrowal accounts to working capital term loans repayable over a period of seven years with provision of moratorium in the first two years.

 

Among other suggestions are interest subvention on working capital, transport subsidy, incentivising exports (orthodox subsidy) and enhancement of RODTEP reward rate for bulk tea. The annual financial impact of the orthodox subsidy is estimated at Rs 36 crore.

 

As part of non-fiscal intervention, the industry has suggested a minimum import price for Nepal teas, which has been impacting the market for Darjeeling tea.

 

The paper pointed out that the estimated cost of production of Darjeeling tea is approximately Rs 650 per kg, which is far above the average price realisation.

 

The widening gap between the cost of production of Darjeeling tea and import price of Nepal tea is adversely impacting the viability of the Darjeeling tea sector, it said.

 

Other non-fiscal interventions put forward in the paper include application of social welfare government schemes for the tea sector, procurement of tea by the government, promotion of Darjeeling tea and incentive for value addition.

 

The industry also requested that in Darjeeling gardens where there is availability of idle labour during the off season, the workers be deployed under MNREGA Scheme for a limited period of 2-3 months with wages payable by the state government.

 

The backdrop

 

The Darjeeling tea industry faces a gamut of challenges -- falling production, exports and high cost of production.

 

Tea production in Darjeeling has shrunk at a CAGR of 5.47 per cent in the last five years, the paper noted. In 2023, during January to November production stood at 5.92 million kg (mkg) while in the same period of 2024, it is estimated at 5.59 mkg.

 

Exports of Darjeeling tea have seen a decline in the last three years. In 2023, it accounted for 41.09 per cent of the produce compared to 51.67 per cent in 2021.

 

And in the last 10 years, Darjeeling tea prices have been increasing at a CAGR of 1.23 per cent, which is lower than the CAGR of all-India auction tea price, according to the paper.

 

The paper mentioned that a large number of estates in Darjeeling were running in losses and finding it difficult to meet their financial obligations.

 

“Banks are reluctant to provide additional working capital to tea companies as a result of which the cash flow scenario continues to be critical,” the paper said.