“The dual VAT rate in the auction centres here creates unhealthy competition among tea manufacturers. In the upcountry auction centres such as Kolkata, Guwahati and Siliguri, there is not only a total tax exemption for sale of the CTC and Orthodox grades at first point but also a uniform one per cent levy of VAT,” he said, adding, “a level-playing field and correction of this anomaly would encourage more participation in the public auction system in Tamil Nadu.”

VAT refund

Mr Chandrakant also said that exporters had to wait for six months to claim the VAT refund. “Because of the levy of VAT on export purchases, the Coimbatore auction centre lost participation of some major exporters in the last three years. They are routing their teas through the Cochin Tea Auction centre as export purchases are still exempt from levy of VAT there,” he said.

Despite this issue, the Coimbatore tea auction turnover through settlement banking crossed the Rs 100-crore mark and marching towards achieving Rs 150 crore by the end of the current calendar year.

While appealing to resolve the glitches in the electronic auction platform to ensure more participation, Mr Chandrakant said it was heartening to note that both the domestic consumption and export of tea was picking up.

He attributed the pick up in export volumes to the promotional measures initiated by the Tea Board in association with tea producers and trade associations in countries such as Egypt, UAE, Iran, Kenya and Pakistan.

Reverting to the volumes handled by the Coimbatore auction centre, Mr Chandrakant said it dropped to 14.63 million kg (mkg) during this year against 15.07 mkg in 2009. “The rates have also not been encouraging. The average price till August hovered around Rs 63 compared to Rs 79.56 during the same period last year

A quick glance at the production figures revealed that the South Indian production of tea increased by 15 mkg to 147 mkg during the first seven months of the current calendar year, while it slipped by 14 mkg in the North, resulting in an overall increase of one million kg in the all Indian volumes.

A National Convention on South India Teas is being proposed by the CTTA in association with the Tea Board between November 12 and 14 at Coimbatore. This is the fourth edition of the event.

It is expected to facilitate tea producers showcase their teas to buyers from potential tea drinking markets in the country, CTTA Chairman Mr Chandrakant said.

The Convention events would feature visits to estates/ tea factories, sit-in sessions chaired by industry experts, tea tasting session, an exhibition to display innovative products and tea packaging machineries.

Source : The Hindu BusinessLine, India, dated 27/09/2010