300 firms evince interest in tea fund

The Tea Board of India has received more than 300 responses for the special purpose tea fund (SPTF), launched by the government for reviving the tea sector and boosting replantation.

The board started inviting applications in June and the fact that it received more than 300 applications is significant given that there are around 800 tea companies in the organised sector.

However, the industry is sceptical about the benefits of the SPTF. Sources close to the development said the expenditure and finance committee had recommended a 25 per cent subsidy, which was the current level of subsidy enjoyed by the industry.

The committee's recommendation would now go to the cabinet for approval.

The Union commerce ministry had recommended a 30 per cent subsidy. But the SPTF was an improvement over the current scheme for replantation in one way. In the current scheme, producers would have to pay the entire amount upfront and would then be reimbursed.

In the new scheme, only 25 per cent would have to be paid upfront, bank loans would be to the tune of 50 per cent and the balance subsidy.

Industry representatives pointed out that with the 25 per cent subsidy, the government had not factored in the crop loss. It would take a minimum of four years for the bushes to grow.

Sources said, the rate of interest was being worked out but was likely to be 9-10 per cent.

Around two lakh hectares required replantation and the cost of replantation at today's rates was Rs 2.16 lakh per hectare. The SPTF was imperative in the light of low yield from the ageing bushes.

The corpus of the fund would be around Rs 4,700 crore over 15 years. The government's contribution would be Rs 100 crore for the year and a levelised contribution each for 15 years. Sources said, the first disbursement under the SPTF was likely to be in December.