Tea Exports

In the event, the Soviets could afford to pay generously for Indian goods. The price of tea in the Indian auctions ruled say 35 per cent higher than the international levels. Except for specialities, Indian teas became uncompetitive. The growers knew how dependent they had become on the Soviet market but what could they do ? If they exported a part of their crop to the hard currency markets at prices 35 per cent lower, they would be accused of under invoicing and run the risk of being punished under the rigorous COFEPOSA.

Earlier the government had signed barter agreements with many countries. A major function of the Tea Board was to promote exports. But under the given circumstances it could do little.

 

Do not compare India with Kenya and Sri Lanka, which have only very small domestic demands. They must ship out almost all they grow regardless of price. When the price levels become uneconomic, these countries devalue their currencies so that their plantations survive. In the event, Kenyan and Sri Lankan teas would always be more competitive than Indian tea.

Do not recommend imports in the wrong belief that Indians drink cheap tea. Today the cheapest varieties go to the CIS countries. Importing cheap stocks for indians so that the costlier ones can earn forex would be a wild goose chase!

Just as one does not deliberately squeeze out a small farmer, one should not create conditions to chase out of business the smaller tea gardens. Apart from the inequity, such measures could provoke ethnic resentment. Many of the Assamese, Bengali, Tamil and Malayali owned tea estates are smaller than the so called larger and better run tea companies.