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Anupriya Patel, India's minister for commerce and industry.
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India’s smallholders are no longer required to obtain a permit to cultivate tea as the country gradually deregulates the tea industry.
In September, the Tea Board of India suspended seven sections of the Tea Act of 1953 following the Union Ministry of Commerce and Industry’s decision to no longer restrict where tea may be grown and who may grow it. Seventeen of the Act’s 51 provisions are no longer enforced as India gradually deregulates the tea sector. The announcement immediately raised concerns about quality and oversupply due to uncontrolled growth that many fear will lower prices overall. The organized sector now produces less than half of India’s tea but earns far better prices than the typical smallholder selling raw leaves to a bought leaf factory.
Prabhat Bezboruah, chairman, Tea Board considers sections of the Tea Act a barrier to entry for new entrepreneurs. Deregulation invites new investment and opens new territory in regions like Bihar, Arunachal Pradesh, and Mizoram that show promise but were previously off-limits.
Arijit Raha, secretary-general of the Indian Tea Association (ITA), told the Times of India that “Oversupply of the brew threatens the sector's sustainability, The unfettered expansion in tea areas in the past few years has been a cause for the non-maintenance of demand-supply equilibrium, adversely impacting prices." He writes that deregulation will drive expansion that is uncontrolled and detrimental.
In Assam, the decision frees thousands of smallholders from a vicious bind as permits to cultivate tea required certificates of ownership. In most instances, smallholders occupy land previously farmed as a plantation that has long since been dissolved. They cannot claim ownership and lack the resources to lease property under existing regulatory mandates. Smallholders in 2020 produced 52% of India’s tea, primarily for production as black CTC (cut, tear, curl) but with a growing segment of specialty tea producers. Few of the hundreds of thousands of acres tilled by smallholders operate with a legal permit. Now they are no longer in violation of the law.
Facing continuing declines in export revenue, India’s Ministry of Commerce and Industry also announced funding of several programs to encourage exports and subsidize mechanization.
Anupriya Patel, India's minister for commerce and industry, told tea executives on a recent trip to Assam that "exports have remained stagnant for the last 10 years." She announced an INR 98 crore allocation (about US$13 million) to boost tea exports from northeastern India.
The ministry's five-year Tea Development & Promotion Scheme (TDPS) provides INR967 crore (US$130 million) for growers, including INR298 crore to fund existing subsidies and INR1,000 crore in benefits to women and children in Assam and West Bengal.
Tea production rebounded in 2021, up 18% compared to the first 8 months of 2020 to 792 million kilos. An estimated 211,794 tea growers cultivate 1.6 million acres (636,557 hectares) under tea.
The Tea Board is transitioning to a more relevant body focused on marketing and promotion, according to Bezboruah.