Storm over teacup: Nepal concerned about possible Indian levies on its tea

NEW DELHI: Nepal is worried about the survival of its tea sector over the possibility of India imposing levies on their tea exports.

"Diplomatically India says that Nepal for India is like a younger sister, however, they are threatening us with heavy levies which will lead to a crisis in the sector and endanger livelihoods of thousands of workers,’’ says former Vice Chairman, Tea and Coffee Board of Nepal, Santosh C Kunwar.

The issue gained momentum after India’s Parliamentary Standing Committee on Commerce in June recommended that the Indian government apply stringent norms for certification of tea that came in from Nepal, in addition to duties.

"The Parliamentary committee also pointed out that the entry of low-quality products from the neighbouring countries was jeopardising the Indian tea industry, and asked that anti-dumping duty ranging from 40-100 per cent be imposed. The panel has also asked that the Indo-Nepal Treaty of 1950 be reviewed,’’ said sources.

India is Nepal’s largest customer for its tea. Out of the 30 million kg of CTC (crush, tear, and curl) tea that India imports annually half the amount at 15 million kg comes from Nepal.

"India suspects that tea from Nepal (which is much cheaper than what is grown within their country) is being surreptitiously blended with Indian tea before being packed and sold in the market. Do we have any control on what the traders do locally?", Kunwar added.

The blending of Orthodox tea imported from Nepal with Darjeeling tea is also allegedly being done in India. The cost of Orthodox tea from Nepal is less than half of what it costs in India. These are also factors responsible for the possible levies that tea imports from Nepal will attract.

Meanwhile, Nepalese tea planters say they have to follow rigorous quarantine regulations once their supplies land in India – which includes a certification they need from the Central Food Laboratory in Kolkata.

"This certification is valid for only six months for one buyer and costs Rs 30,000. If we intend to sell the same product to another buyer, we need another certification. Tea planters of Nepal are making a presentation to Prime Minister Sher Bahadur Deuba to convince Indian authorities not to levy more taxes. If bill number 171 (recommended by the Indian Parliamentary Standing Committee) gets cleared, it would be a death knell for Nepal’s tea sector,’’ lamented Kunwar.

Tea produced in Nepal which is cheaper than Rs 250 per kg isn’t allowed to be exported to India at present as it would create challenges for tea producers in India.

Nepalese tea growers are also highlighting the fact that consideration be given to them as they import goods worth $9 billion from India every year as they are almost entirely dependent on India.

Nepal’s tea planters are hoping against hope that the Indian government doesn’t impose heavy duties on their tea and are optimistic that diplomatic ties between the two nations will thwart this possible move.

NEW DELHI: Nepal is worried about the survival of its tea sector over the possibility of India imposing levies on their tea exports. "Diplomatically India says that Nepal for India is like a younger sister, however, they are threatening us with heavy levies which will lead to a crisis in the sector and endanger livelihoods of thousands of workers,’’ says former Vice Chairman, Tea and Coffee Board of Nepal, Santosh C Kunwar. The issue gained momentum after India’s Parliamentary Standing Committee on Commerce in June recommended that the Indian government apply stringent norms for certification of tea that came in from Nepal, in addition to duties. "The Parliamentary committee also pointed out that the entry of low-quality products from the neighbouring countries was jeopardising the Indian tea industry, and asked that anti-dumping duty ranging from 40-100 per cent be imposed. The panel has also asked that the Indo-Nepal Treaty of 1950 be reviewed,’’ said sources. India is Nepal’s largest customer for its tea. Out of the 30 million kg of CTC (crush, tear, and curl) tea that India imports annually half the amount at 15 million kg comes from Nepal. "India suspects that tea from Nepal (which is much cheaper than what is grown within their country) is being surreptitiously blended with Indian tea before being packed and sold in the market. Do we have any control on what the traders do locally?", Kunwar added. The blending of Orthodox tea imported from Nepal with Darjeeling tea is also allegedly being done in India. The cost of Orthodox tea from Nepal is less than half of what it costs in India. These are also factors responsible for the possible levies that tea imports from Nepal will attract. Meanwhile, Nepalese tea planters say they have to follow rigorous quarantine regulations once their supplies land in India – which includes a certification they need from the Central Food Laboratory in Kolkata. "This certification is valid for only six months for one buyer and costs Rs 30,000. If we intend to sell the same product to another buyer, we need another certification. Tea planters of Nepal are making a presentation to Prime Minister Sher Bahadur Deuba to convince Indian authorities not to levy more taxes. If bill number 171 (recommended by the Indian Parliamentary Standing Committee) gets cleared, it would be a death knell for Nepal’s tea sector,’’ lamented Kunwar. ALSO READ | Abnormal surge in natural gas prices hurting tea sector, says association Tea produced in Nepal which is cheaper than Rs 250 per kg isn’t allowed to be exported to India at present as it would create challenges for tea producers in India. Nepalese tea growers are also highlighting the fact that consideration be given to them as they import goods worth $9 billion from India every year as they are almost entirely dependent on India. Nepal’s tea planters are hoping against hope that the Indian government doesn’t impose heavy duties on their tea and are optimistic that diplomatic ties between the two nations will thwart this possible move. READ HERE | Ukraine conflict affects India's telecom, tea exports: Centre in Parliament