Tea, coffee exports may take a hit: UPASI

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Kochi | Published: April 7, 2015 12:11:40 AM

Tea and coffee exports from India are likely to come under pressure due to the lowering of incentives by 2% for bulk consignments...

Tea and coffee exports from India are likely to come under pressure due to the lowering of incentives by 2% for bulk consignments by the government, officials of the United Planters Association of Southern India (UPASI) said.

Tea and coffee exports, both bulk and value added, were earlier eligible for incentive in the form of Duty Credit Scrip at 5% of the FoB value of exports under the Vishesh Krishi and Gram Udyog Yojana (VKGUY). It has now been reduced to 3% for bulk exports under the new Merchandise Exports from India Scheme (MEIS). More than 90% of the tea and coffee exports from the country are in the bulk form.

“While the new Foreign Trade Policy has attempted to simplify the procedures involved in exports, it has hit the coffee and tea plantations by reducing the incentives for bulk exports by 2%. Changing over to value addition or packaged form is not easy and feasible as the demand is for the bulk commodities as it is used for value addition by the importers. Further, certain countries discourage imports of value added products to their countries by levy of additional tariffs,” Vijayan Rajes, president of UPASI, said.

Rajes said that the plantation industry is reeling under tremendous pressure on account of lower prices and skyrocketing cost of production. Reduction of incentives would add pressure as the exporters are facing competition from low cost producers, he added.

“Coffee and tea  prices are under pressure globally and seen lower when compared to last year. The weighted average ICO indicator prices in US cents per pound of ‘Other Arabicas’ and ‘Robustas’ have dropped from 223.48 and 100.5 in April 2014 to 160.74 and 92.16 respectively in March 2015. The scenario is not different with regard to tea as the south Indian average price of R92.25 per kg during the first quarter of 2014 has fallen to R83.58 per kg during the corresponding period of 2015,” he said.

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