mjunction, a joint venture of Steel Authority of India Ltd. and Tata Steel, is set to bag the tender for operating an alternative tea e-auction platform. The Tea Board had floated the tender for selection and appointment of a system integrator for design, development and maintenance of an e-auction platform of tea at Jorhat, Assam.
MoU to be signed
Talks have progressed between officials of Tea Board and mjunction, and a memorandum of understanding will be signed after consultation with a team from IIM Bangalore, appointed by the regulator, to study and vet the final proposal.
The platform will be hosted in a ‘cloud environment’. Steps will also be taken to eliminate any scope of conflict of interest with mjunction, which is a major e-commerce entity.
Public tea auction has been the main mode of primary tea marketing in India for over a century since the setting up of the first tea auction centre in erstwhile Calcutta. About 500 million kg of tea out of India’s annual estimated at 1,350 million kg in 2018-19 is sold through auctions.
Currently, six centres auction tea through the electronic auction system. Each of these centres is run by a separate committee, which act as an auction organiser, using the Tea Board platform. While the present system has a software that can be accessed by participants from their desktops, physical centres are also in existence in all the locations to enable buyers to participate in the bidding.
Jorhat has been chosen for the new model as it is seen as the nerve centre of five major tea-growing districts of Assam with an annual output that topped 200 million kg, officials said. The work scope includes facilitating tea sale from the manufacturing unit or from a centralised warehouse located closer to the tea-producing units or the auction centre. The bidder will also have to provide logistics support for facilitating delivery of sold tea.
The e-auction system was launched in 2008 replacing the manual outcry system, signalling a paradigm shift in the 150-year old Indian tea industry. However, although this became pan-India subsequently, time and again trade as well as industry, have flagged issues regarding the system. Over ₹8,000 crore worth of tea is sold through the existing auction system but prices have stagnated at around ₹150 a kg, with industry and trade talking about oversupply.
For long, the need has been felt to try an alternative and innovative model. A tea trade source said that the proposed new initiative would be an independent e-auction platform with several innovative features.
When contacted, Tea Board deputy chairman Arun Kumar Ray declined to talk on the mjuntion bid, but said that for long, the need was felt to bring in an entity which will bring efficiencies in the trade and lower costs thereby improving the value of the teas in a manner that will percolate to the industry. He said that the existing system is also being upgraded.
