| L.V. Saptharishi, additional commerce secretary, at the 39th annual general meeting of the Tea Association of India in Calcutta on Saturday. Picture by Kishore Roy Chowdhury
Calcutta, June 14: The Union commerce ministry has opened talks with the Reserve Bank of India (RBI) for floating government-guaranteed tea and coffee bonds to restructure and provide funds to the industry.
This was announced by L.V. Saptharishi, additional commerce secretary, at the 39th annual general meeting of the Tea Association of India (TAI) here today.
Tea and coffee bonds will be issued by the Tea Board and the Coffee Board respectively. The size of the bond issue has not yet been decided.
“According to rough estimates, both the industries together need Rs 500 crore for liquidating their liabilities and development. If RBI allows us to issue bonds it will be roughly in the region of Rs 500 crore,” said Saptharishi.
The bonds will be have a tenure of five to seven years. Typically these government-backed bonds are subscribed by banks and financial institutions.
The tea and coffee producers will initially access the funds that will be mopped up through these bonds. “Then they will be asked to repay the money over a period of time,” the additional commerce secretary said.
Reacting to the tea industry’s demand for providing funds to meet social costs, Saptharishi said the government is working on a scheme so that a certain percentage of the social cost can be borne by it.
At present, the industry has to bear the social cost which include housing, primary education and medical facilities for the tea workers.
The commerce ministry has also spoken to the National Bank for Agricultural and Rural Development (Nabard) for providing some funds to the Tea Board under the Rural Infrastructure Development Fund (RIDF) scheme. The fund will be used by the industry and repaid over a period of time.
Saptharishi stressed the need for giving more thrust to exports for the survival of the Indian tea industry. He expressed his displeasure over the promotional campaign that was launched last year in Russia which has not yielded enough results. “Indian tea producers have not been able to supply the teas that Russia wanted,” he said.
Electronic auction system
The traditional tea auction in the country is likely to come to an end as the Tea Board gears up to introduce the electronic system at all the major centres from December next.
“Based on the recommendations of leading consultants Accenture and A. F. Ferguson, appointed to suggest ways to improve the auction system in the country, the Union commerce ministry has cleared a proposal to this effect and by December, all the six centres will start electronic auction system. This will help to bring transparency,” Basudeb Banerjee, deputy chairman of the Tea Board, said at the annual general meeting of TAI.
All the six centres — Calcutta, Guwahati, Siliguri, Kochi, Coimbatore and Coonoor — will have the system and there will be a provision to start even on-line auction if it was required at a later stage, he said, adding, the Amritsar auction centre will not be brought into the new system as very little quantity of green teas were auctioned there.