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Your cup of tea just got costlier

Tea leaf prices have gone up by Rs24/kg in last one month, the latest being on Monday. Tea processors & traders blame tea producers, seek duty free import of tea leaf to curb prices.

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Ek cutting chai is just going to cut deeper into your wallets.

Thanks to tea producing companies, the prices of the hot energizer have gone up twice in last five weeks. On April 16 this year, tea producers increased prices by Rs12 per kg. And just after a month, the prices were hiked by another Rs12 per kg, on Monday.

In last two months, tea leaf has become expensive by 9% or Rs24 per kg. So the tea processors and traders are urging government to allow duty free imported tea to curb tea prices. After hike, the average price of the tea has increased from Rs280 per kg to Rs304 per kg. Blaming it on to tea producers, the tea processors and traders have alleged that the producers are taking advantage of the monopoly.

“Produced predominantly in Assam and West Bengal, the Indian tea garden owners have the monopoly and so they have hiked the tea prices twice in last two months, by Rs12 every time. The production of tea has remained almost flat for past many years while the demand is continuously rising. Co-incidentally, since last three years, tea arrivals started with shortfall in production due to irregular rainfall. As a result, the tea producers had to increase the prices, which were passed on to us (tea processors) and further will be pass on to customers,” said Piyush Desai, chairman of Wagh Bakri Group.

According to Desai, the annual tea production of the country is around 980 million kg. "Of the total, consumption stands around 800 million kg while remaining 180 million kg is exported to various countries across the world. For past three years, the production has not increased and looking at the present situation, there are no hopes of any rise in tea production in the country. So the only option or choice for India is duty free imported tea," said Desai.

At present, there is 100% duty over imported tea. "The cost of the tea made in Kenya is cheaper than Indian tea but just because of 100% addition duty it becomes doubly expensive. In Kenya, the cost of tea is around Rs180 per kg which jumps to Rs360 per kg after it is brought to India. It is almost expensive by Rs60 per kg compared to the Indian tea," said Desai.

Echoing similar sentiments, Ashok Relia, the advisor to Ahmedabad Tea Merchant Association and member of Federation of All India Tea Traders' Association, "Now we need to break the monopoly of the Indian tea garden owners. Of the total tea produced in the country, 80% comes from Assam and West Bengal alone. The federation and association of tea processors and traders have made representations to the Tea Board of India, government body, and asked them to allow duty free import of tea," said Relia. The secretary general of the Indian Tea Association, Monojit Dasgupta was not available for comment.

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