Guwahati: Four major tea producer bodies from Assam and West Bengal have made a desperate appeal to Prime Minister Narendra Modi to scrap or suitably modify mandatory auction norms that require a significant portion of manufactured tea to be sold through public auctions.The ministry of commerce and industry, in its order dated Oct 1, 2015, mandated producers to sell not less than 50% of their annual production through public auctions. A subsequent order on Feb 23, 2024, tightened the mandate further, stipulating that 50% of total tea and 100% of dust grades must go through auctions.
The Assam Bought Leaf Tea Manufacturers Association (ABLTMA), North Eastern Tea Association (NETA), Bharatiya Cha Parishad (BCP), and North Bengal Tea Producers’ Welfare Association (NBTPWA) have urged the Prime Minister that “producers be given the freedom to choose their mode of sale (auction or private), in line with market dynamics”.These four producer bodies account for 60% of north India’s 1,120 million kg annual output — representing 83% of India’s total 1,350 million kg. Assam, which contributes 50% of national production, and West Bengal, which contributes 30%, face the greatest impact.The memorandum stated that compulsory sale through public auctions places tea producers at a significant disadvantage. “The auction system involves higher transaction costs and longer selling cycles compared to ex-factory sales. The cost of selling through auctions is approximately Rs 10 per kg, amounting to nearly 5% of the average selling price — often exceeding the net profit margins of producers,” the letter said.The producers stated that although this provision has existed for several years, it was not enforced until recently, when a circular issued by the registering authority sought to implement the requirement.They pointed out that several expert committees constituted by the Tea Board have examined the auction system. “While recommendations for improving efficiency have been made, none have advocated mandatory auction sales,” they stated.They also pointed out that other commodity boards under the ministry of commerce and industry do not impose similar restrictions requiring compulsory sale through auctions. “The rationale for such a requirement being uniquely applicable to the tea sector remains unclear,” they added.They wrote, “…this mandate is inconsistent with the Government of India’s policy of promoting Ease of Doing Business (EoDB). Producers should have the flexibility to choose the most efficient and viable mode of sale. The current requirement imposes undue financial and operational burdens on the industry.”
