For Nepal’s troubled tea industry, India’s import barriers could be a death knell

Tea is a daily fix – in Nepal and India. But this humble leaf has emerged as an issue that may need diplomatic communications between the two countries – both known for producing one of the most consumed items in the world.

Worried that India may ramp up import barriers on Nepali tea to protect its own industry, Nepali tea producers on Tuesday met with Prime Minister Sher Bahadur Deuba to apprise him of the possible consequences of such a move.

India is the largest buyer of Nepali tea, and more stringent requirements for the certificate of origin, as has been demanded by an Indian parliamentary panel, would be disastrous for domestic producers, insiders say.

A seven-member team of Suryodaya Tea Producers Association arrived in Kathmandu from Ilam on Sunday to appeal for official intervention. The delegation also called on Finance Minister Janardan Sharma on Monday.

“Deuba has assured us that he will raise the issue with the authorities concerned, including Indian Ambassador to Nepal Naveen Srivastava,” Bishnu Prasad Bhattarai, executive director of the National Tea and Coffee Development Board, told the Post.

Nepal is worried about the survival of its tea sector if India imposes levies on tea exports.

India’s Parliamentary Standing Committee on Commerce in June recommended that the government apply stringent norms for certification of tea that is exported from Nepal to India, 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% be imposed, according to reports.

The panel has also asked that the Indo-Nepal Treaty of 1950 be reviewed.

Nepali tea producers say any move to restrict exports will hit the industry hard. Nepal ships around 90 percent of its orthodox tea and 50% of its crush, tear and curl (CTC) tea to the southern neighbour.”If India’s proposal materialises, it will be a disaster for the Nepali tea industry,” said Mahesh Aryal, treasurer of the Suryodaya Tea Producers Association. “It’s important to address the issue quickly by holding bilateral talks.”On July 31, the National Tea and Coffee Development Board had written to the Ministry of Industry, Commerce and Supplies about the Indian parliamentary committee’s decision.“The issue can be sorted out through bilateral negotiations,” Bhattarai said.Years ago, the Darjeeling Tea Association had requested the then Indian President Pranab Mukherjee to stop the import of Nepali tea by submitting a memorandum when he visited Darjeeling.
There have been several attempts from Darjeeling to stop the import of Nepali tea.

Indian producers have been alleging that Nepal’s tea is substandard, and that the prices too are lower which is hurting India’s tea production.

Reports say that the cheaper tea produced in Nepal isn’t allowed to be exported to India currently as it would create challenges for tea producers in India.

“If India implements the new policy, it may affect thousands of farmers,” said Aryal.

The decision may put hundreds of factories on the verge of collapse because imposing duties on tea will make Nepali tea expensive.

Nepal produces around 7,168 tonnes of orthodox tea annually in the hills. It also produces 15,654 tonnes of CTC tea, known for its strong and bright appearance, in the lowlands of the Tarai. According to the Agriculture Ministry’s statistics, Nepal shipped 12,494 tonnes of tea worth Rs 3.43 billion in the last fiscal year ended July 16.Tea producers say that Nepalis consume nearly Rs2 billion worth of tea annually. Nepal’s Rs 5-billion tea industry, which is one of the key foreign exchange earners for the country, is going through hard times. Tea farmers in the country’s eastern region have been facing acute shortages of urea, one of the most important sources of nitrogen.

News Source: thewire.in

Original link (https://thewire.in/trade/india-nepal-tea-import-barrier)