The Central Government has been urged to clear the sizable backlog of subsidies that it had promised to the tea industry for producing orthodox tea, which has a good demand in the international market fetching high prices.

The issue was taken up with the Union Commerce Secretary during his visit to the city on Friday. During the meeting, industry regulator, the Tea Board of India, also mooted a proposal to tie-up the end-use of the subsidy scheme, sources said. “While the Tea Board has recommended for the continuation of the subsidy scheme, it has also made a suggestion on changing the format so that the subsidy is tied to the end-use,” a source who attended the meeting told The Hindu.

At the meeting, the tea industry was represented by the apex body of the north Indian producers, the Indian Tea Association, as well as Tea Research Association. Senior officials of the Tea Board, including the Chairman and the Vice-Chairman, and the Director (Tea Promotion) attended the meet. Since 2007, the government had been asking the industry to prepare a plan for increasing orthodox tea production.

Orthodox variety produces better quality aroma and is in greater demand in the international arena. India, however, has been a traditional producer of the Crush Tea and Curl (CTC) variety with the erstwhile USSR acting as backbone of the export market.

The U.K., the UAE and Iran have all been consumers of orthodox tea and India's bias towards CTC had led to a steady erosion of its market, especially in the face of competition from countries like Sri Lanka. India felt the heat on its largest commodity exports once Russia too started shifting in favour of orthodox tea. The country suffered a six-million-kg drop in tea exports in 2006, following a sizable erosion of the Russian market.

The annual subsidy bill for catalysing orthodox tea production is around Rs. 35 crore. Production stands at about 80 million kg with a Rs. 42-crore backlog of subsidies piling up since 2008-09.

Keywords: tea industry

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