The Telegraph
Since 1st March, 1999
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Cup of cheer for brew industry

Calcutta/Siliguri, Feb. 28: The patience and perseverance shown by the tea industry in going through a four-year crisis have borne fruit with the commerce ministry planning to set up a special purpose tea fund. The government has pledged a Rs 100-crore support to the fund for this fiscal.

This was announced as part of finance minister P. Chidambaram's budget speech today.

The finance minister also said the initial amount of Rs 100 crore would be followed up by levelised contribution from the Centre every year, which would benefit the tea growing states of Assam, Bengal, Tamil Nadu, Kerala and Uttaranchal.

Though the Indian Tea Association (ITA) has welcomed the proposal to start off the fund with a corpus of Rs 100 crore, the Dooars Branch of Indian Tea Association (DBITA) is not so sure. Citing the examples of two sick Dooars gardens, secretary of the DBITA P.K. Bhattacharya said: 'The accumulated liability of Raimatang and Kalchini alone is about Rs 42 crore and there are so many such closed estates in north Bengal. The amount is too meagre for the industry, whose liability is several times higher.'

The ITA, however, has specially appreciated the commitment made by the government to make a levelised contribution annually for the 15-year programme for replantation and rejuvenation.

'After four years' struggle, this comes as the government's acknowledgement of the issues plaguing the tea industry. It's a good start,' said B.M. Khaitan, chairman of McLeod Russel India Limited.

At present, around 2.12 lakh hectares across the country require replantation or rejuvenation with the cost of replantation being Rs 2.60 lakh per hectare and rejuvenation a little lower, said Monojit Dasgupta, general secretary, ITA.

The association feels the government's commitment to this fund would make it possible to raise funds from banks and financial institutions. The budgetary provision for infrastructure in the Northeast, doubling from Rs 346 crore to Rs 600 crore, would reduce the time taken to transport the processed tea to the market, said Gautam Bhalla, executive director of Warren Tea.

The ITA, however, is concerned with the widening of the service tax net to include auctioneering/broking services. This could substantially increase the cost of buying tea from auctions. Industry sources, however, feel since the explanatory note specifies auctioneering of property, it remains to be seen whether tea is included in the ambit.

Some of the changes proposed in the fringe benefit tax like lower rates for travel costs and exemption of sponsorship fees for brand ambassadors would also benefit operations of the tea companies.

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