February , 2020
Tea Board seeks to enhance domestic consumption rate
16:46 pm

B.E. Bureau

Tea Board India, a central government organisation under Ministry of Commerce & Industry, is an apex body for the tea industry in India and looks after the overall welfare and development, as well as promotion, both domestic and international, for the tea industry. Arun Kumar Ray, IPS, Deputy Chairman, Tea Board India, spoke to BE’s Kuntala Sarkar.

Q. What is your organisation’s strategy to increase the growth rate of the domestic tea industry?

A. The tea industry in India is facing oversupply situation. Increase in the number of small tea growers and enhanced productivity of big estates has led to a high quantum of production since the past few years. Compared to that, consumption in domestic and export markets has not gone up at a commensurate rate. There is a need for conducting more promotional programmes and campaigns for tea - both in India and in international markets - to encourage people to consume more teas. Sri Lanka, one of our top competitors, has a budget of Rs 350 crore for promotional activities for the next three years through which they are concentrating on the export markets. Indian tea which is competing with the Sri Lankan and Kenyan teas, may be impacted unless corrective actions are taken. For the domestic market, we have received a report by one of the top consulting firms in India where they have suggested a need for a sustained generic promotional campaign   at an expenditure of about Rs 80 crore over the next three years in order to enhance domestic consumption.

India’s performance in the export market in terms of volume has been growing. Around 254 million kg of tea was exported in the previous financial year. We have taken initiatives like factory closure in December (winter) to stop plucking of poor quality tea leaves and have insisted on pruning cycles in tea gardens to enhance the quality of tea. This has reflected in a better price realisation in the export market.

Q. How is Indian tea performing in the export market?

A. Most of our tea exports are taking place through merchant exporters in the form of bulk tea which naturally fetches a lesser price than value added tea. Price realisation of Sri Lankan tea is much higher because they have brands which are basically value added teas. A brand can help push the industry for better price realisation in the international markets. The initiatives of ‘Make in India’ and ‘Brand India’ are steps towards this direction. We are working with several Government bodies so that we can get the traceability and sustainability highlighted with regard to Indian tea varieties. Unfortunately, Indian brands have mostly concentrated in the domestic market. At present, we export about 50 million kg plus tea to Iran which has become our largest export market. Apart from our established markets, exporters must invest more time and money to develop new markets and ensure brand promotion of value added products.

Q. How is the Board is focusing on quality control?

A. We have a Quality Control Laboratory in Siliguri to check the quality and residue (MRL) parameters which are required under Food Safety and Standards Authority of India (FSSAI). We are facing some challenges regarding availability of human resource. To enhance the output of the lab, a management and operation contract is under finalisation on the lines of the new FSSAI run lab at Ghaziabad.

Q. Is the Board promoting organic tea production?

A. Today across the world, organic products get high value due to its greater health benefits. The production output in case of an organic garden reduces naturally, thereby posing a challenge for the garden owners. For a tea garden going organic, we have schemes that will help the farmer or the estate to convert. The government is also highlighting the growth of organic products because of its better acceptability across the globe.

Q. What are the government policies to boost the industry?

A. The tea sector is now in the lowest GST band. The Tea Cess imposed by the central government has been removed giving much relief to the industry. To enhance the financial stability of the established gardens, tea tourism is being encouraged as an alternate economic activity.

We have also conceptualised a new initiative, ‘Chai Sahyog’, a mobile application which has been running for the last six months. It is a traceability tool for the consumers.  High valued products like Assam Orthodox Tea, Darjeeling Tea are placed in a better position in terms of value realisation as they are carrying the Geographical Indication (GI) mark. The ‘Chai Sahyog’ application will help the consumers to trace the exact quality and brand of tea that will certainly lead to better pricing which is much needed in India’s present domestic market.

Q. How are you looking at the auction platforms?

A. The tea industry is facing crucial problems regarding payments mainly due to the fact that banks have put the industry in the negative list. The industry is facing issues of getting adequate working capital. To deal with this, we are trying to facilitate industry players with better trading options. Our auction platforms are being upgraded on the recommendations of IIM Bangalore. The auction platform has facilities like automatic bank funding through the credit card system both for buyers and similar system for sellers (bill discounting). To further enhance the efficiency of the auction platform, we have permitted mjunction (a SAIL/Tata Steel joint venture) to take up a new age e-auction module for tea trading.

Q. How is your organisation placed in implementing precise regulations regarding licensing?

A. There are only fifteen tea broker firms existing in the tea ecosystem, the leading ones being J Thomas, Paramount Tea, Contemporary Brokers and others. Their offices are located in Siliguri, Guwahati, Kolkata and Cochin where majority of the tea auctions are taking place. With regard to the licensing policy, we are moving away from a renewal licensing platform to a perpetual licensing policy. Presently, the licenses are given by the Tea Board for a three or five year term. In case of a perpetual license, if we find any regulatory issue at the end of the term, we would not extend the license. Otherwise, the licensee just needs to apply to our portal for renewal and the license is auto-generated, subject to payment of the renewal fees. Today our Auction platform is one of the most economical in the world where transaction cost is 2 paise per kg of tea for each stakeholder irrespective of price. Due to our initiative of moving the process to a cloud platform and with the assistance of stakeholders, the auction presently functions at almost zero cost to Tea Board. This platform mechanism has been acclaimed across the globe and the model is to be replicated in other countries.

Q. How is the Board planning to ensure the welfare of tea garden workers?

A. During the initial stage of development of the Indian tea industry, workers from various parts of the country migrated to the plantation areas for employment. However, at present the workers are switching from this profession to find other vocations. Wage enhancement for the industry will be in tune with general wage increase which will be as per the new Wage Code. Increased wages should ideally lead to better productivity and production of better quality teas. The bigger estates are facing additional problems regarding wages as they are bearing extra costs. These extra costs are not being offset due to low price realisation of tea in the Indian market. Under a scheme for the education of the children of tea plantation workers, a subsidy of Rs 20,000 and an additional assistance of Rs 20,000 if they are staying in hostels, is provided. There are specific earmarked funds for the workers and their families in case of medical emergencies and critical illness.



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