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Small tea growers in north Bengal prepare to set up own processing units

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Kolkata: Complaining about the abnormally low price for their yields, small tea growers in north Bengal’s Terai and Dooars area are now seeking help from the union government to set up their own processing units to reduce their dependency on estate and bought leaf factories (BLFs) in the region.

Small tea growers (STGs) – who sell their green plucked leaves to these processing factories – alleged that the payment from the bought tea leaf factories for their produce is much too low. The BLFs do not own any gardens but buy the green plucked leaves from the small tea growers, process them and sell it to packers and blenders.

“While the production cost in north Bengal is as high as Rs. 12.78 per kg, we only get Rs. 5-7 per kg on selling to the BLFs. We cannot sell tea in the auctions, as a result of which we are not able to know how much our teas actually fetch in the markets,” Bijoygopal Chakraborty, president of the Confederation of Indian Small Tea Growers Association (CISTA), told IANS.

According to a majority of the small tea planters, self-owned micro-small garden factories will help reduce their dependency on the BLFs and hence improve their revenues and profitability.

He alleged the 137 BLFs in the region are forcefully enforcing their own quality standards, disregarding the norms of the Tea Board, which is resulting in the STGs getting low incomes.

Sanjay Dhanuti, president of the North Bengal Tea Producers Association – comprising the BLFs – said the prices are dependent on the quality of leaves, which varies across gardens and flush seasons.

“If the stock has 20 percent count of good quality green leaves, it can fetch between Rs. 10.5-12 per kg while a 35 percent fine count can fetch Rs. 13 per kg. However, for produce which is of low quality, it goes around the market, for as low as Rs. 7 per kg and nobody is willing to buy it”, Dhanuti told IANS.

This problem, however, does not persist for the small tea growers in Darjeeling, who get a fair price for their yield, selling the leaves at Rs.35 to Rs.40 a kg to the BLFs.

The STG association has written to union Commerce and Industry Minister Nirmala Sitharaman, highlighting their concerns.

“There is a lack of transparency in terms of how the BLFs and the estate factories sell the made tea and the price at which they sell it. The price of tea fluctuates so much that during the peak season time it reduces to Rs.3-Rs.5 a kg”, the letter said.

Chakraborty said lack of their own processing units, remote location of the small-scale gardens and the perishable nature of the green leaves are the primary reasons for their woes.

While the government has already sanctioned a 25 percent subsidy to set up micro-small processing units for the STG’s gardens, the industry body has asked the minister to step up the monitoring process by the Tea Board while procuring or buying the processing machines, besides expressing other concerns.

“There are nearly 52 companies which have mushroomed to sell their machinery to the micro-small processing units despite having no credentials to produce good quality machines. The Tea Board need to check their quality and durability before disbursing any subsidy,” Chakraborty said.

The ministry had allocated Rs.200 crore ($30 million) during the 12th Five-Year Plan (2012-17) for the development of the country’s small tea planters. The small tea growers are however wary about the machinery subsidy reaching the BLFs or gardens.

“The first priority for the subsidy needs to be the collectives set-up by STGs and the proposed factories need to be given only to the actual small tea planter who has the capacity to process his own yield,” Chakraborty said.

Tea growers in the region said ensuring this will not replicate the existing scenario between the STGs and BLFs.

According to CISTA, in case the factories are allotted to planters who do not have sufficient cultivable area or yield, the planter in the long run may himself become another BLF which may further jeopardize the trade.

The Tea Board has also taken steps to secure the interests of small tea growers.

“We have introduced the minimum benchmark price which defines the minimum price payable to the STGs for green leaf purchase. This varies across regions and violation of the prescribed price may eventually result in cancellation of a factory’s license,” Chandra Shekhar Mitra, deputy director of tea development at the Tea Board, told IANS.

To promote tea output, the Tea Board has also abolished the compulsory notarised declaration on cultivation practices, standards and management of personnel from tea gardens to avail of the subsidies and replaced this with self-attested declarations.

(Avishek Rakshit, IANS)

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Automotive Industry To Benefit From Corporate Tax Cut, Says ICRA

India's automotive industry is likely to be one of the key beneficiaries of the recent corporate tax cut, credit ratings agency ICRA said on Monday

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India, Tax cut, Automotive Industry
India's automotive industry is likely to be one of the key beneficiaries of the recent corporate tax cut. Wikimedia Commons

India’s automotive industry is likely to be one of the key beneficiaries of the recent corporate tax cut, credit ratings agency ICRA said on Monday.

“Under the current weak demand conditions, OEMs (original equipment manufacturers) are expected to pass on some of the benefits of tax revision to the end consumers,” ICRA Vice President and Sector Head Pavethra Ponniah was quoted in a statement.

“This implies that the price correction in coming months will to an extent address the demand side issues. Moreover, clarity from the government, that there is no further GST or cess revision, will help consumers who were waiting for improved clarity prior to their car purchase decision,” she added.

According to ICRA, the current reduction of corporate tax rates in India to globally competitive levels will incentivise OEMs and their vendors to increase localisation, which augurs well for the industry.

In 2019-2020, India has imported auto components worth $17.6 billion.

India, Tax cut, Automotive Industry
the current reduction of corporate tax rates in India to globally competitive levels will incentivise OEMs and their vendors to increase localisation. Pixabay

ICRA also said that given the increasing US-China trade tensions, revision in corporate tax will attract FDI in Indian manufacturing sector, as the revised tax structure is now in line with other emerging markets.

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“In the current fiscal, the Indian automotive industry, especially the passenger vehicle segment, has witnessed one of the worst slides since the last two decades because of multiple factors,” the ratings agency said in a statement.

“Tighter financing environment for consumers and the liquidity crunch faced by dealerships coupled with weak farm income and overall slowdown in economic activity has impacted consumer sentiments and purchasing behaviour,” the statement added. (IANS)