The Indian Tea Board has rejected a proposal to allow imports of tea at a lower customs duty after the production dropped due to the coronavirus outbreak and auction prices increased sharply earlier this year.
“Due to COVID-19, tea production had dropped, while consumption was more. Auction prices increased by over 50 percent. In view of the prices rising, traders approached the commerce ministry for importing tea at a lower import duty,” Tea Board Chief Executive Officer (CEO) and Deputy Chairman Pramod Kumar Sahoo said.
The board rejected the proposal, saying it was a “one-off” year when the growers earned good prices for their produce.
India, the world's second-biggest tea producer, imposes 100 percent customs duty on imports from countries other than those with which it has a bilateral trade agreement or the South Asian Association for Regional Cooperation’s Free Trade Agreement (SAFTA). Imports for re-exports are duty-free.
Demand for imports was made after tea production dropped 13 percent during January-October this year to 1.03 billion kg against 1.18 billion kg in the year-ago period.
Prices dropped mainly because planters in the northeastern regions of Assam and Bengal had to forego the first flush during March-April due to the coronavirus pandemic.
It was not until mid-May that tea production resumed in the northeast after the annual halt to tea plucking from mid-December to mid-February due to winter.
Tea prices topped Rs 200 a kg in South India in early September, a rare occurrence, while they touched almost Rs 300 at the Guwahati auctions. This led to the proposal for imports at a lower duty, though prices have tumbled since then.
The all-India average price for tea dropped to around Rs 160 a kg the previous week compared with Rs 260 in the first week of September.
The Tea Board has also begun tightening its Tea Marketing (Control) Order 2005, with a notification on September 10 saying that all teas sold in the country should comply with the Food Safety Standard (Packaging & Labelling) Regulations, 2011. This is mainly to check tea imports.
Tea industry sources said shipments of tea from other countries were on the rise, though they are meant for re-exports. The sources said not all the teas imported for re-exporters were being shipped out and the Tea Board notification could have been issued to tackle this.
The board pointed out paragraph 3 of the order that says “no distributor shall carry out the business of distributing imported tea and no exporters shall export teas or export imported tea except under a business licence obtained in accordance with the provisions of this order”.
The notification also said that 60.35 million kg of tea was imported in the last three years for re-export but only 23.43 million kg was shipped out.
According to the United Planters’ Association of Southern India secretary Sanjith R Nair, 22 million kg had been imported during January-September this year against 17 million kg in the year-ago period.
Of this, 50 percent of the tea had come from Nepal and 23 percent from Kenya.
Sahoo said since the notification was issued on September 10, compliance had improved. “In one particular case, 130 kg had arrived without a prior licence. The customs authorities asked the importer to get a no-objection certificate from us but we turned it down saying prior licence is a must,” he said. Before the Tea Board stepped in, imports took place “left and right”.
On the problems in controlling imports, especially from Nepal under SAFTA, he said that tea had to be tested under 34 parameters by the Food Safety and Standards Authority of India (FSSAI) did not have the required staff.
“The onus is on the customs. The Tea Board has written to the Central Board of Indirect Taxes and Customs (CBEC) to check this, while FSSAI has also written to CBEC,” the Tea Board CEO said.
Confederation of Indian Small Tea Growers Association President Bijoy Kumar Chakraborthy said import for re-export was not good as it affected the flavour, particularly of Indian tea.
“Imported tea does not blend well with Indian teas. We have complained to FSSAI on the issue,” he said.
(Subramani Ra Mancombu is a journalist based in Chennai who writes on commodities and agriculture)
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