The Union ministry of commerce has directed both the bought leaf factories and tea estate factories to route 50 per cent of their produce through auctions.
Earlier the ministry through a notification issued on April 15 had stipulated bought leaf tea factories to sell 70 per cent of tea through auctions, which had generated a lot of criticism from the industry and the Assam government.
"The new notification of directing both the bought leaf factories and the tea estate factories to route 50 per cent of the produce through the auctions is the result of a series of representations received from the industry by the ministry," a Tea Board of India official said.
The notification issued on October 1, called Tea (Marketing) Control (Second Amendment) Order, 2015, stated that the estate factories will also have to sell 50 per cent of their produce.
"Every registered tea manufacturer shall, on and from the date of commencement of this notification, sell not less than 50 per cent of the total tea manufactured in a calendar year through public tea auctions in India" the notification says.
The Tea Marketing Control Order (TMCO) promulgated in April 1984, had provided for manufacturers of tea to sell not less than 75 per cent of their total annual production through public tea auction. There were a series of representations from all sections of the industry, urging the government for reconsideration of the stipulation of mandatory routing of teas through the auction system and the stipulation was finally taken back in 2001.
Chairman of Golaghat-based North Eastern Tea Association Bidyanand Barkakoty told The Telegraph that the April 15, 2015 notification and October 1, 2015 notification, which gave effect to amendment to clause or para 21 of the Tea Marketing Control Order (TMCO), 2003, is not needed in a liberalised, globalised economy. Such compulsions should not be applicable to any segment of the manufacturers.
"All buyers registered with the Tea Board of India have not been subjected to the obligation of making 70 per cent of their purchase from the auction centres. Moreover, all the buyers registered with the Tea Board are not registered with the tea auction centres," he said.
He said the total arrivals of tea at GTAC from April to September (sale no 14 to 37) is about 103 million kg and sold quantity is about 59 million kg, which shows that there are huge percentage of teas that remain unsold. "If more teas come to the auction centres then there is every possibility that the unsold percentage will increase and prices may further dip," he added.
A senior official of a leading company said the question is whether the GTAC has the required infrastructure to handle the increased quantity of teas, which will come once the estate factories start sending 50 per cent of their produce.
"This will be a big setback to those gardens who had invested a lot of time and money in creating markets outside to get remunerative prices. By asking them to compulsorily route teas through the auctions will not be a wise decision," another official said.