Calcutta, July 7 :     The Reserve Bank of India (RBI) will meet Tea Board chairman S. S. Ahuja on Monday to finalise the modalities for tea exports to Russia, raising hopes that the talks may lead to the abolition of the system whereby the Russian importers have to open a letter of credit in favour of Indian firms. 'The ministry of commerce and the central bank are working out alternative procedures with the Bank for Foreign Economic Affairs (BFEA) in Russia. The procedures are being fine-tuned and we expect that RBI to announce these procedures soon. Doing away with the requirement for a letter of credit is one of the options,' Ahuja told The Telegraph. Russia is a key buyer and accounted for over 46 per cent of total tea exports last year. Of the 225 million kg target fixed for this year, the industry aims to ship 100 million kgs to Russia this year. The state credit route is still the dominant method of payments in tea exports to Russia. However, this meant that transaction costs remained high for importers because they had to provide a letter of credit cover for Indian companies. The other problem is that payments through letter of credit also take about two and a half months to be settled. 'An alternative procedure that does not involve opening of L/C by the importer and allows outright shipment on the condition that the proceeds are repatriated within 180 days, would help neutralise the high transaction costs and, therefore, make Indian tea more attractive to Russians. A major export initiative to the Russian federation will be launched in two weeks. The exercise will get a boost if the modified procedures are in place soon,' the sources said. Much of the exports to Russia come from South India, but the volumes shrunk last year. This year too, the response is not encouraging. As a result, the prices of South Indian tea are not looking up. The Indian Tea Association has requested the commerce ministry to get the planned amendments, now being discussed by the RBI and BFEA, implemented soon. The South Indian tea industry is also suffering the consequences of allowing tea imports from Sri Lanka at a concessional duty of 7.5 per cent ad valorem compared with the prevailing basic customs duty rate of 35 per cent. 'The ITA's import projection of 10 million kgs for this year is merely a reflection of the prevailing policy of the government and the relative price scenario. It is, however, an indisputable fact that even at this level of imports, the market appears to be working to the disadvantage of the tea industry in South India which has to compete with Sri Lankan teas. The position has worsened after the recent devaluation of the Sri Lankan currency,' a senior ITA official said. ITA has suggested the government to withdraw the concessions extended to Sri Lanka in the form of preferential duty rate of 7.5 per cent and enhancing the basic custom duty on tea to near the WTO bound rate of tea around 140 per cent.