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Mon, Sep 03, 2007 - Page 10 News List

Indian tea industry fights back against cheap brews


India's hard-hit tea industry has launched an aggressive "fight back" strategy to boost production and sales in the face of stiff challenges from rival nations churning out cheaper brews.

India is the world's second-largest tea producer and rang up a record 955 million kilogram crop last year with northeastern Assam state accounting for 55 percent.

China, the largest producer of the brew, made 1.02 billion kilograms last year.

But prices have been under pressure since the 1990s.

"The new tea strategy now is to chase both volume and value in exports. We're getting positive results and 2007 is turning out to be a good year for tea," Indian junior commerce minister Jairam Ramesh said.

As part of its campaign to boost production and quality, New Delhi launched in June a 48 billion rupee (US$1.2 billion) package to help the beleaguered industry replant aging tea bushes.

"The Special Purpose Tea Fund is a project covering about 200,000 hectares in 1,000 of India's nearly 1,600 plantations," Ramesh said.

India's production is expected to jump by close to 40 percent once aging bushes over 50 years old are replanted or rejuvenated -- a process involving cutting or pruning, officials said.

"We will also plant high-yielding clones which would nearly double production and give us premium tea," said Dhiraj Kakaty, an official of the Indian Tea Association, the top tea administration body.

India's US$1.5 billion-a-year tea industry has been facing a crisis with prices dropping in weekly auctions since 1998 and exports plummeting.

The industry now is showing signs of resurgence, officials said in Assam, which has over 800 plantations that employ around ` million people.

A kilogram of good quality tea fetched 73 rupees in recent weekly auctions compared to an average 68 rupees last year. And exports rose by 8 million kilograms to 200 million kilograms last year from the previous year.

"These are good indicators and we're sure prices will firm and exports increase," the minister said.

Prices, however, are still below those fetched in the late 1990s when a kilogram of good quality tea from Assam or South India got 95 rupees to 100 rupees.

The slump in prices and exports is largely attributed to cheap, inferior quality teas produced by many new growers like Vietnam, Bangladesh and Iran. This has meant Indian teas are facing stiffer competition in the global market.

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