KOLKATA: The effect of the global meltdown since September this year is fast spilling over to the Indian tea industry. Major tea exporters are facing difficulties as fund flows from overseas markets have slowed down significantly over the last few months.
Reports of a financial crisis in the banking system in Pakistan have made Indian banks wary of letter of credits (LCs) from that country which has further added to the woes of Indian tea industry. There are also reports that exports to Russia might also slow down in the coming months due to a similar situation. Tea industry officials said banks have become overcautious owing to this global recession, which is affecting tea exports from India.
In its status report on tea for 2008 released on Thursday, the Indian Tea Association (ITA) has said: “Tea exports have already gone up in 2008. But the recent global financial crisis particularly affecting markets like Russia, Pakistan and others have placed a doubt over maintaining buoyancy in exports seen in August this year. Taking into consideration the prevailing trend of exports, we have projected a level of 200 mn kg as exports during 2008.”
In order to assist tea exporters, ITA has also requested the central government to include black tea in the Vishesh Krishi Gram Udyog Yojna Scheme. ITA is also concerned over the import of inferior or substandard tea. In the last few years, it has been noticed that the average CIF value of imports from certain countries like Vietnam was significantly lower than the corresponding price averages prevailing in India.
ITA strongly feels that the prevailing rate of import duty at 100%, should be maintained in order to contain influx of cheap tea into the country and guard the domestic tea industry. The ITA status paper said: “Given the present state of WTO talks and that the Indo-Asean FTA have already been inked, reduction in import duty rates are likely in a phased manner.
At a meeting with the commerce secretary in September this year, it is understood that the Asean-Indo Free Trade Agreement (FTA) has finalised reduction in import tariff for tea into India from 2009, phase-wise to 45%, with 5% reduction every year.” ITA has projected a production of 962 mn kg and import of 20 mn kg of tea in calendar 2008.
Source : The Economic Times