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Withdrawal of sops hurts tea exports

Calcutta, May 14: Tea exporters are worried that the 170-million-kg export target set for the current financial year may not be achieved.

The Indian Merchant Tea Exporters Forum (IMTEF) feels that over the last couple of years the focus has been on addressing the supply side factors and the emphasis on exports has taken a backseat.

As a result of the shift in focus, merchant exporters have been left to fend for themselves and face the onslaught of tea imports, IMTEF said.

Accroding to R. Kaushik, chairman of IMTEF, certain benefits available to exporters have been withdrawn or reduced over the years. This is affecting tea exports, he argued.

The introduction of value-added tax is one of the major areas of concern for these exporters. VAT makes it mandatory for them to first pay the tax and then seek refund three months later. This blocks working capital and reduces the competitiveness of Indian exporters compared with exporters of other tea producing countries who do not face such costs.

The merchant exporters are also unhappy with the introduction of the Tea (distribution and export) Control Order 2005. They feel that with the wave of liberalisation sweeping through the economy, such an order brings in more stringent controls and unnecessary paperwork.

“Exports are being treated like imports were in the past with a host of licensing and pre-approvals,” Kaushik said.

However, Tea Board officials said that the control order was necessary to check the export of cheap and spurious quality Indian tea. In fact, a certain consignment of cheap tea to Libya created an uproar in the industry.

IMTEF also criticised that the withdrawal of all promotional support by the Tea Board has also affected exports adversely.

IMTEF had proposed a freight subsidy plan that is consistent with the norms set by the World Trade Organisation (WTO) to offset the natural disadvantage in freight faced by Indian tea exports. However, the government has informed tea exporters that the proposal has not been accepted.

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