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Panel to mull raising FDI limit in tea plantations

India's commerce and industry minister Murasoli Maran today said that the Group of Ministers or GoM will consider a proposal to raise the foreign direct investment or FDI limit in tea plantations to 74 per cent from the current 24 per cent, even though the vexatious issue of foreign ownership of land in the country is yet to be resolved.

Besides, the government was seriously considering allowing futures trading in tea as a tool to achieve stability in tea prices which were violently fluctuating in the recent past.

''We are seriously considering to allow futures in tea. Right now it is in the incubation stage,'' Maran told reporters here on the sidelines of the three-day India International Millennium Tea Convention.

On allowing FDI in tea plantations, the GoM comprising all important portfolios like home, finance, commerce and industry will soon decide on raising foreign investment in this crucial cash crop.

The Indian tea industry has requested that the FDI limit in tea plantations be raised as it is facing an unprecedented situation of lower production, lower exports and paradoxically lower prices.

Earlier, inaugurating the convention, Maran stressed on arresting the wild price fluctuations as they may discourage long term investments in tea and one such method could be to develop forward and futures markets. Also, risk management tools, which have been used by coffee, cocoa and sugar traders and producers need to be evolved in the tea trade as well, he added.

Maran called upon the industry to systematically go for generic promotion of tea by overcoming their brand loyalties.

''After all, if there were to be serious mismatch between demand and production, the brand image alone cannot help the producer much," he said, citing the Food and Agriculture Organisation's projections which said that consumption is projected to increase only in the countries where tea has firmly established itself.

Indian tea is one of the most organised industries employing more than a million people directly, generating a revenue of about Rs 60 billion and accounting for 30 per cent of world production.

Discovery of anti-oxidants in both black and green teas and anti-carcinogenic properties are bound to give an added advantage to the generic promotion programmes, Maran added.

The ministers further stressed that the Indian tea industry should achieve higher levels of value addition in the chain, if it wants to realise better returns.

UNI

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