New foreign trade policy disappoints tea sector

KOLKATA: Tea industry has expressed disappointment over reduction in export benefits for tea in Foreign Trade Policy 2015 -2020.

Government has replaced Vishesh Krishi Gram Udyog Yojana (VKGUY) with Merchandise Exports from India Scheme (MEIS) in the new policy which directly impacts organic tea exporters, Darjeeling Tea Association chairman S S Bagaria told PTI.

The government instead boosting the sector has made tea exports more uncompetitive in the global market at a time when unfavourable forex movement in the Euro had hit hard.

Tea producers body Indian Tea Association (ITA) had also expressed disappointment.

"Under the MEIS the benefit stand reduced from 5 per cent to 3 per cent in respect of bulk teas which will adversely impact the competitiveness of tea in global markets," ITA said in a statement.

Bulk tea constitutes around 90 per cent of total tea exports.

Tea had been earlier included in the Vishesh Krishi Gram Udyog Yojana (VKGUY) and had been enjoying 5 per cent benefit for non-organic and seven per cent for organic tea covering both bulk and value-added teas.

Indian tea exports continue to be under severe strain. Tea Board's latest data for the period April-January of 2014-15 recorded a decline of nearly 28 million kgs from that of the corresponding period of 2013-14.

This decline has largely been in the wake of increased competition from lower cost tea producers such as East African countries, ITA sources said.