Tea industry seeks continuation of subsidy

Tea industry seeks continuation of subsidy

Kolkata: The tea industry has urged the finance ministry to continue with the orthodox subsidy scheme for sustaining Indian exports.

In a pre-Budget memorandum to the finance ministry, the Indian Tea Association (ITA) said the subsidy scheme had helped in correcting the product-mix and enabled availability of more orthodox variety.

The association said the Tea Board under the commerce ministry was yet to release the subsidy amount for 2008-09.

In this context, ITA said the subsidy backlog for 2008-09 and 2009-10 be released, so that producers were encouraged to continue production of the variety.

The association noted the consultancy firm appointed by the Tea Board had advocated continuance of the subsidy scheme for the balance of the 11th Plan period as well as during the 12th Plan period.

ITA said the finance ministry should take a positive view in this regard.

The association also said the concessional duty on specified tea machinery items be reduced from 5% to zero for a period of three years, starting 1 April 2011.

This would make the Indian tea industry competitive globally, he said.

Referring to Section 33AB of the Income Tax Act, ITA said migration to the proposed Direct Tax Code should contain provisions of the section.

ITA said the Section requires that tea companies set aside a certain portion of the profits in good years for deployment in development activities in bad years. The Section allows for a deductible allowance of up to 40% of pre-tax profits.

The association called for sharing of social costs incurred by the tea companies. It suggested the government should evolve a suitable mechanism, whereby the high social costs were substantially mitigated.

The body suggested the high security costs incurred by the gardens in Assam due to insurgency be also shared by both the state and Centre.