Senior Darjeeling planters said the industry has decided to ask banks to reduce the rate of interest from the current level and enhance the borrowing limit.
“The Reserve Bank of India recently declared a package for the tea industry which is being discussed with banks,” planters said.
Despite this, Darjeeling planters say they need a breather from banks.
“A proposal will be submitted to the banks through the Tea Board of India by the end of this month or early next year.”
The planters had taken loans at rates as high as 16–17 per cent. “It has become difficult for the industry to service such high rates of interest, so they want a respite. The industry will seek a reduction of 10–11 per cent in interest rates,” tea industry officials said.
The package offered by RBI includes conversion of seasonal deficits to term loans, extension of liquidation period of working capital dues up to six months where outstandings are backed by stocks/receivables, rescheduling existing term loans, treatment of term loan and working capital limit after conversion/restructuring/reschedulement as current dues and not as non-performing assets and allowance of interest rate up to two stages better than applicable as per borrowers’ limit.
The RBI package was announced following the Madhukar (chairman and managing director of United Bank of India) committee’s recommendations on the issue.
The Darjeeling tea industry is struggling for some time, its main problem being that only first ‘flush’ tea fetches some price. About 35-40 per cent of premium Darjeeling tea picked in the first and second flush is exported and fetches revenues for the industry. The remaining 60 per cent, produced from July to October, must find buyers at home. It is this variety that is sold below production costs, dragging average prices down. Prices failed to pick up this year as well.
The industry is also plagued by labour problems. “With a huge labour force of 60,000, the survival of the industry is at stake,” the industry added.
In the last AGM, K. S. David, managing director of the Goodricke Group and chairman of Darjeeling Planters’ Association (DPA) had said industry should take a common stand on signing unreasonable and unwarranted agreements with unions to buy peace with them.