Tea fund gains momentum as banks pitch in

KOLKATA | COIMBATORE: The replantation and rejuvenation of the country’s ageing tea bushes under the special purpose tea fund (SPTF) scheme has gathered momentum as a consortium of four banks led by Kolkata-based Uco Bank has come forward to help the tea industry. The replanting of ageing tea bushes is the need of the hour as the domestic consumption of tea is increasing at a rate of 3-3.5%.

Estates in north India (Assam and West Bengal) are more pro-active in availing SPTF. According to a senior Tea Board official, 1,686 tea estates have availed SPTF, of which 616 are from north India. The rest 85 estates are from south India. According to the SPTF scheme, 50% of funds will come as a loan from banks, 25% will be provided by the central government as subsidy, and the rest 25% will be borne by the borrowers.

G. Boriah, director (tea development) of Tea Board told ET: “Till date, `71.74 crore has been disbursed as subsidy while `28.80 crore has been disbursed as loan. Initially, there was some problem in getting loan from banks under SPTF. But we had a discussion with Indian Banks’ Association (IBA) and things were sorted out. Now the banks are showing interest to help the tea industry under the SPTF scheme.”

Interestingly, since the financial condition of the tea sector has improved in last two years, tea companies are taking much lower amount as loans. “Sometimes it is said that SPTF has not picked up the way as was expected. Actually in the last two years, the domestic demand for tea has picked up which has resulted in price rise. The tea companies were not keen to uproot tea bushes as this would have resulted in crop loss.

Prices of tea had recovered after a gap of almost 9 years and, therefore, the tea companies were not willing to lose this opportunity. However, the replantation and rejuvenation is gradually picking up. From Tea Board we are also organising roadshows to popularise the scheme,” Mr Boriah added.

However, SPTF take-off in southern tea estates has not been encouraging. The difficult terrain, labour shortage, and region specific issues like ban on earth moving equipment in Nilgiris and certain parts falling under the disputed areas of Nilgiris-Wayanad region are the major roadblocks to make full use of the special purpose fund. The target of 2.5% per annum could not be achieved in south India due to these factors.

Source: Economic Times