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February 26, 2000

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Sector report: Tea and coffee

Dun and Bradstreet India

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Key players
Tata Tata, Eveready, Nestle, Hindustan Lever, Assam Company, Harrison Malayalam, Goodricke Group, AFT Industries, Duncans Industries.

Tax structure

Customs Duty (%)    
Item 1998-1999 1999-2000
Tea 15 16.5
Coffee 15 16.5
   
Excise Duty    
Item 1998-1999 1999-2000
Bulk Tea Rs 2 a kg
Packed tea 8 %

Background

Tea

  • Tea is on the negative list of imports. Importing tea requires a special licence.
  • India accounts for 25 per cent of the world's tea production.
  • Production of tea during April-November 1999 has fallen by 8 per cent compared to the corresponding period in the previous year.
  • Exports of tea fell 10 per cent in 1999 due to reduced demand from United Arab Emirates and Russia.

Coffee

  • Almost two-third of the coffee produced in India is exported as a result of which the coffee industry is significantly impacted by changes in global coffee prices.
  • Coffee production increased by 12.7 per cent in April-November 1999 compared to the corresponding period of the previous year.

Expectations from the Budget

  • The United Planters Association of South India has called for the exemption of the tea industry from excise duty.
  • The association has further demanded that import duty on tea be raised to protect the domestic tea industry.
  • Indian Tea Association has demanded a higher level of marketing support and interest free loans from the Brand Equity Fund for promoting consumption of Indian tea abroad.

ALSO SEE:

What will Yashwant Sinha do?

How will personal taxes change?

Fiscal report card

SECTOR ANALYSIS:




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