UPDATE-1-Govt mulls package for tea industry-junior min

By Niladri Bhattacharya

KOLKATA, Nov 4 (Reuters) - The Indian federal government is considering a package for the tea industry, the junior trade minister said on Wednesday "Social cost is a major issue with the tea industry. The government is taking this matter very seriously and shortly we are going to come out with a package for this industry," Jyotiraditya Scindia told reporters.

Social cost includes all the basic amenities which are provided to labours by the plantation owners, he said.

"Social amenities adds around 7 rupees per kg in the production cost, and we have proposed that half of this cost should be borne by the centre and the state government," Indian Tea Association Chairman, Aditya Khaitan, told Reuters.

This would be in addition to the 6 billion rupees alloted this year through the Tea Board under Special Purpose Tea Fund (SPTF) for re-plantations and rejuvenation in tea gardens, he added.

The SPTF was announced in 2005, under which federal government would give 42 billion rupees grant to the tea industry over a period of 15 years.

An industry expert said the proposed package would be helpful in reducing the production cost, boosting global competitiveness of Indian tea.

"A package for this would unable us to reduce the fixed (production) cost and be more competitive, as in countries like Sri Lanka and Kenya, the producers do not bear such cost," he added.

The minister said the industry should look to improve the quality of the tea produced and focus more on exporting the orthodox variety of tea rather than crushed tear and curl (CTC) variety leafs.