Tea Board plans export cess to fund promotions
The Tea Board of India is weighing the idea of introducing a cess on tea exports, the proceeds of which will be used to f und promotional activities related to the sector in the country and abroad. The cess could be around ~2/kg of exports, sources suggested. The tea board of India’s biggest rival Sri Lanka charges LKR3.5/KG (~1.4/kg) export cess to promote Ceylon tea. This year, so far, India has exported 206.69 million kg of tea.
The Tea Board is currently in discussion with several industry bodies like the Indian Tea Association to chalk out the modus operandi for imposing a cess, as well as its rate.
However, it is suggested that this tax or cess will not be levied on all exporters or planters who directly export their harvest, but only on tea companies interested in promotions in India or abroad, the sources said.
“We are yet to finalise the fine prints to fund promotional activities. We need money to promote Indian tea if we are to hold on to our market share and gain in some of the key markets,” A.K. Ray, deputy chairman at the Tea Board, told Business Standard.
A final call on this proposed cess will be taken latest by the end of the ongoing financial year.
A study by the Tea Board, in association with a consultant, has indicated that to boost consumption, it needs to spend around ~80 crore over the next three years on promotion and marketing activities. While the Tea Board, given the current fund-crunch situation, can arrange for only 50 per cent of the targeted marketing expenses, it is banking on individual tea companies to source the money.
Under the proposed marketing and promotions mechanism, individual tea company names can feature on Tea Board stalls and kiosks abroad for promotion. Besides, the packets used by the Tea Board to promote tea among the influential class will have the names of tea estates or companies mentioned.
Under the current mechanism, tea is sourced by the Board from private companies and is labelled as generic tea like Assam Orthodox, Darjeeling Orthodox, and Nilgiri. Such promotions are usually undertaken in across 47 export countries, and 50 places within India.