The draft Tea (Promotion and Development) Bill, 2022, is to replace the 68-year-old Tea Act, 1953. The commerce ministry, which is handling the bill, says the new law will remove colonial-era provisions and socialist-era government restrictions on industry.
However, whether merely a change in the regulatory framework will help solve the industry’s problems remains an important question. Of course, it is no use saying reforms in this area are in dire need.
Consider this: Currently, anyone who wants to start growing tea needs the permission of the government to plant tea! A separate license is required to make tea. Exports are controlled and there are quotas and allocations.
Colonial-era provisions included the right of the government to actually remove or destroy any tea planted “without permission”. Under the current Act, the Center has the power to control the price of tea and can fix the minimum or maximum price as per its choice.
Under the Tea Cess Act, which dates back to 1903, the government levies a cess on all tea produced to fund the “promotion and marketing” of tea.
There are more stringent provisions. With the tea sector steadily declining in the seventies, the government armed itself with the powers to take over the management of any property that remained closed for more than three months without investigation. This was done under pressure from labor unions, during a phase in India’s economic history when nationalization was widely seen as a cure for development problems.
In fact, whether under colonial rulers or post-independence, the central government has sought to keep a tight rein on tea, one of India’s most lucrative cash crops. Although tea growing is technically agriculture, which is a state subject, the Central Tea Board Act, passed soon after independence in 1949, ensured that control over tea remained in central hands.
From above, it has worked well for India. India is today the second largest producer of tea in the world, accounting for a fifth of the world’s production with an annual production of over 1.2 billion kilograms. It is also the fourth largest exporter after China, Sri Lanka and Kenya.
But these figures do not give the complete picture. Production has remained stagnant over the years, while the quality of tea produced has declined drastically, as plant and leaf quality steadily decline due to chronic low investment in plantations.
This also affects the realizations in both the domestic and export markets. While India consumes a substantial portion – over 85% – of the tea it produces, most of it is in the form of CTC and dust tea, which uses poor quality leaves. In terms of export value, India lags far behind – Kenya’s tea exports stood at $1.2 billion in 2021, more than double that of India, while the top exporter earned more than $2 billion, which is India’s total exports. more than three times.
The trouble is that all policy interventions in the tea industry have failed to stop the sector’s deep rot. From financial troubles to acute infrastructure challenges, including chronic power shortages and outages, widespread labor problems that have led to an exodus of organized sector players from the plantation sector and an influx of speculative investors and land sharks, as well as Long, low, labor-run gardens, rising transportation costs and above all, the dramatic effects of climate change have all combined with the secular decline of the tea sector.
For starters, tea production is falling – from about 1.4 billion kilograms in 2019, to 1.2 billion kilograms last year, thanks to climate change impacts, insect impacts and falling receipts from green leaf sales, which have led to many Producers got a boost. Just quitting production.
Rising wage costs, and the intervention of state governments, have really worsened and haven’t helped solve the problem. For example, the West Bengal government is a part of a tripartite wage agreement between workers, employers and the government. According to a study conducted by ASSOCHAM and ICRA (tea industry at the crossroads), the cost of wages has quadrupled in the past decade. Last month, Tripura announced a welfare scheme for tea workers, including housing subsidy, ration, healthcare and minimum wages. 176 per day.
For this the state government will spend There are only 7,000 tea workers in Tripura since 85 crore. But it has thrown neighboring West Bengal and Assam – with half a million and a million direct workers, respectively – into turmoil, raising similar demands that have no financially stressed governments to meet .
Trade unions, on the other hand, say that the proposed draft bill will only formalize the current reality. They allege that millions of hectares have been planted without permission, and for the rise of stand-alone ‘bought tea’ factories that source the foliage from small growers, which evade regulatory provisions of the Plantation Act and the Tea Act. .
It is also debatable whether legislative reform alone can address deeper problems such as falling prices, lack of innovation and diversification, falling productivity and climate change impacts.
While the government’s delayed reform efforts are well done, India has long missed the bus in tea.