By Ashis Biswas
While Darjeeling tea planters are pressing central government again to impose a minimum import tax (MIT) on imported Nepal tea, to arrest the steep decline in Indian high value export earnings, Nepalese producers feel bilateral level talks may help improve the situation.
Darjeeling planters had appealed to GOI to take immediate steps to safeguard the future of their costly brands as early as in January this year. However, no action/relief followed despite prolonged discussions.
Nepalese authorities have not commented on the matter officially. But unofficial analyses and reports on this somewhat sensitive issue as published in the Nepali media suggest that in case India imposed some kind of tax/tariff on locally produced tea varieties, Kathmandu might retaliate by slapping similar levy on selected items imported from India. The imposition of such duties, concerned circles in Nepal agree, are not favourable for the growth of bilateral trade and business. In recent years, the problems faced by the Darjeeling –based tea industry have become generic character, compounded by an apparent indifference of GOI to help the producers effectively.
Continuing complaints against Nepalese producers aggressively pushing the sale to India legally or otherwise, of sub-standard varieties, passing these off as genuine Darjeeling-produced stuff, constitute a small part of the overall difficulties they face.
Trade and Industry circles say that between 2016 and 2022, the annual production of Darjeeling tea had declined from over 8.1 million kilos (mkg) to around 6.5 mkgs. Producers have faced a double whammy as the average auction price of their crop has also clumped, from Rs 360 a kilo to around Rs 340 between 2021 and 2022!
Among reasons cited for the overall production decline are the effects of global warming, increasing heat, erratic rains, recurrent pest attacks, uncertain nature of yield from old bushes, rising costs of inputs , etc.
Indian authorities on the other hand point to the growing lack of interest among new generation of planters to stick to tea production, which has turned into an increasingly uncertain economic pursuit, as a primary source of their income. Most planters have developed alternate avenues of investment, shifting investments to real estate, tourism or hospitality -related activity.
Outcome: a reluctance to invest for the future growth/prospects in their plantations, leading to less attention paid to the quality of necessary inputs and the need for better labour relations.
A strongly negative perception has grown among many planters, according to some reports, that the major problems currently faced by the tea industry are far beyond the control of producers to address, let alone solve. Only a massive, well planned long term financial and technological aid package provided by GOI can help their trade and business to survive.
Darjeeling-based elite planters are no exception to the rule and must evolve technically and otherwise to deal with fresh challenges as they arise, in common with hundreds of other average planters churning out more pedestrian varieties for domestic consumption.
In the larger context of the crisis in tea industry, steadily growing sales of Nepalese varieties to North Bengal and adjacent areas come as an additional irritant. Despite certain climatic and terrain-related similarities, there remains an appreciable gap in the quality/taste between Darjeeling and Nepali-produced varieties. Most Nepal-produced varieties sell for about 50% of the price of the genuine product from Darjeeling.
Unregulated purchases and traders make the most of the existing official loopholes to mix different varieties to increase earnings illegally. This hurts the sale of genuine high value tea production maintained by dedicated planters who are deprived of a fair playing field!
No wonder members of Indian Tea Exporters Association (ITEA) and Tea Board circles have repeatedly pointed to the existing trends afflicting their trade to GOI and are pressing urgently for relief. In addition to the proposed imposition of a Minimum Import Tax (MIT) on the purchase of Nepali varieties, they have also called for a substantial one time subsidy for Darjeeling planters still in business. Many have already downed their shutters and quit, it has been pointed out and more may follow suit unless GOI acts.
There is no question that in recent times, the steady growth of Nepali imports has assumed worrying proportions. Within the last five years, sales of cheaper Nepali varieties have risen, according to one estimate, from 11.5 mkgs in 2017 to about 17 mkgs in 2022!
A further irony in the present situation is that the present arrangements ensure that the plantations/gardens in Nepal will continue to function normally, providing employment to local labourers, while production suffers, plantations close down and people lose their jobs in India. Surely this needs to be addressed by GOI, say observers. (IPA Service)