A 20 per cent export clause in a 12th plan scheme for upgrading tea quality is proving to be a dampener for the industry, as the clause is restrictive, sources said.
The scheme is valid up to March 31, 2017 and October-end is the last date for receiving applications for availing the scheme. So far, very few applications have been received by the Tea Board of India, which administers the plan schemes.
Tea Board sources agreed that the 20 per cent export obligation would make it difficult for tea companies to avail the scheme. The QUPD (quality upgrade and product diversification) scheme aims at enhancing the quality of made-tea through modernisation of tea-factories while creating value-addition facilities.
A similar scheme during the 11th plan was very successful as it did not have the export clause. “Nearly 1,485 gardens availed of the scheme,” an industry official said.
Orthodox teasThe 25 per cent subsidy available through the scheme is mainly for upgrading machinery for producing orthodox teas, which enjoy higher prices in the export market when compared with CTC teas.
“CTC teas are cheaper and hence easier to sell in the domestic and the export market.. but it is the orthodox teas which enjoy a premium in the international market,” an industry source said, adding that Sri Lanka and Indonesia were proving to be tough competitors in this segment. Against an average cost of production of about Rs.180 for producing a kilogram of CTC tea, the cost for orthodox tea is about Rs.210 a kg.
