Pre-Budget expectations of tea sector

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Kolkata: Free imports of tea from Nepal sold as Darjeeling tea and the TDS of 2% on cash transactions exceeding Rs 1 crore a year have hit West Bengal’s tea industry badly and must be removed for the industry to survive, said officials representing the old cash crop of the state.

While the tax came into effect from September 1, 2019, tea industry representatives said duty-free imports of tea from Nepal has threatened Darjeeling tea itself.

Interestingly, grown in similar climatic regions, tea from Nepal made inroads into the country during the 104-day strike in the north Bengal hills in 2017 to press for a separate homeland of Gorkhaland.

Bengal’s tea estates are located in north Bengal districts of Darjeeling, Kalimpong, Jalpaiguri, Alipurduar and Cooch Behar.

There are 284 gardens that employ nearly 3 lakh workers, most of whom are labourers engaged in the gardens. West Bengal is the second biggest tea growing state in the country accounting for about one-fourth of the production of this cash crop.

“The TDS of 2% on cash withdrawals of Rs 1 crore are hurting the gardens seriously. Most of the gardens are burdened with an additional expenditure of Rs 35-40 lakh on the account of only this tax,” said Sumit Ghosh, secretary, Tea Association of India, north Bengal branch.

Ghosh rued that though the Centre is trying to minimise cash transactions or payment, it is

impossible to avoid cash transactions in tea gardens, especially payments to the labourers which is usually done fortnightly.

Most of the gardens are located in remote areas where telecom connectivity is poor and these regions are not serviced by banks.

“It is also difficult to set up ATMs here. It is not practicable to make payments to labourers in their bank accounts since they cannot withdraw the money. A worker has to undertake a long and time consuming journey to go to a bank or an ATM to withdraw money,” said Ghosh.

Since every worker has to regularly undertake such trips to banks/ATMs, production, too, will suffer, pointed out Ghosh.

Emphasising on the menace of the imports from Nepal, Sandeep Mukherjee, secretary of Darjeeling Tea Association, the body that represents the gardens in the hills of Bengal, said Nepali tea has swamped the country and is doing irreparable damage to the best flavoured tea of the country.

“Last year the gardens of Darjeeling produced 8 million kg of tea. But imports from Nepal amounted to 9.7 million kg that was mainly sold as Darjeeling tea. We have written to the Union commerce ministry and Tea Board highlighting the problem but no steps have been taken so far. We hope the government will address this issue in this budget,” said Mukherjee.

Mukherjee also pointed out that exports of Darjeeling tea to Nepal attract a 40 per cent duty while the produce of Nepal are free from any duty. Moreover, while Darjeeling tea has been certified by Food Safety and Standards Authority of India as organic, the tea coming from Nepal do not have to conform to such rigour.

“The minimum that we expect is a level playing field both in terms of duties slapped on the commodity and the quality of the product. Since tea from Nepal is not organic chemical residue are found in it,” said Mukherjee.

Of the 284 gardens, 87 are in the hills of Darjeeling and Kalimpong, 87 are in Terai region while 150 are in the Dooars region. Some of the gardens in Darjeeling hills such as Happy Valley, Chamong, Orange Valley and Castleton produce tea with the most flavoured tea that is cherished by connoisseurs all over the world.

The 87 gardens of Darjeeling and Kalimpong are spread over an area of 17,200 hectares and appoint a permanent workforce of about 65,000 and about 19,000 seasonal workers who are taken in during the plucking season.

Shiv Saria, Managing Director of Soongachi Tea Industries, who owns four gardens in north Bengal, hoped that the Centre would resume subsidies.

“Gardens used to get subsidies on upgradation of plant and machinery, rejuvenation and replantation. But Tea Board is not receiving applications for subsidy over the past two years. We hope these would be revived after the budget,” said Saria who has been in the tea business since 1955.

Ranaraj K Gupta, who is a Kolkata-based importer and exporter of Indian tea in Australia and Europe, thinks the Centre should take up promotion of Indian tea aggressively across the world.

“Tea Board can be utilised for the purpose but young professionals of the tea industry should be involved and bureaucracy should be minimalised,” said Gupta.