At a time when India's tea production is growing at a sluggish pace against constantly rising domestic consumption, tea traders and marketing companies are looking for a complete abolition or a partial cut in import duty on tea, which may help bring rising prices of the leaf commodity under control.
According to estimates provided by Western India Tea Dealers Association (WITDA), India's tea production growth stands at around 1.5 per cent per annum, while domestic tea consumption is growing in the range of three to five per cent per annum.
“Production is growing at a slower pace than consumption. And if the government continues to discourage imports by imposing 100 per cent duty on tea imports, things will be difficult in the coming years as lower availability of tea may affect prices too,” said Piyush Desai, president, WITDA.
“We are demanding complete abolition of import duty, or it should be fixed at 15 per cent on the lines of tea imports from Sri Lanka,” he said. Tea imports from Sri Lanka are capped at 15 million kg with an import duty of about 13-15 per cent.
Against the annual tea production of 980 million kg, India consumes about 800-820 million kg and exports close to 180 million kg every year. According to Desai, imports from Kenya and Sri Lanka will improve tea quality for Indian consumers.
“We blend Kenyan tea and Sri Lankan tea to bring brightness and aroma to the strong Indian Assam tea. By restricting imports, government should not deprive domestic consumers of quality tea,” said Desai, who is also the chairman of the Wagh Bakri tea group.
However, some of the tea players see adverse impact of encouraging tea imports to India. “We are already having surplus tea production. Imports will put pressure on tea prices at the auction level. Once India starts imports, international markets will jump, making imports costly. So, allowing imports in the current situation will ultimately hit consumers and small growers,” said Azam Monem, director of McLeod Russel India Ltd (MRIL). Monem is also chairman of the export promotion and marketing committee of the Indian Tea Association (ITA).
It may be noted that India’s tea imports have been dwindling over the past five years. In 2007-08, India imported a total of 16.75 million kg, which increased to 25.86 million kg in 2009-10.
In 2011-12 (April-November) tea imports to India stood at 12.1 million kg .