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India is likely to impose restrictions on tea trade with Nepal, as duty-free exports of low-quality tea from the neighbouring country being blended with Darjeeling tea is hampering the latter’s brand globally.

The Union commerce ministry has already brought in regulations to check the influx of cheaper tea from Nepal, while the parliamentary standing committee on commerce has recommended a review of the Indo-Nepal treaty to incorporate stringent requirements for a “certificate of origin” on tea imports from Nepal.

A large section of importers are passing on inferior Nepal tea as Darjeeling tea at much lower prices, causing huge financial loss to Darjeeling planters. Some local traders are also re-exporting the Nepal tea to global markets as Darjeeling tea. The premium authentic Darjeeling tea is also selling at a lower price in the global market as a result.

While the Tea Board of India says it has started acting on the commerce ministry’s recommendations, small tea garden owners, mostly selling their product in auctions, say Nepal is still continuing to dump its tea in India.

The Revised Treaty of Trade between India and Nepal signed on October 2009 is valid up to 2023. It lets each party exempt, on a reciprocal basis, mutually decided primary products from basic customs duty and quantitative restrictions.

Tea is among such products eligible for preferential treatment. But exports of Indian tea attract a 40% import duty in Nepal, while tea imports from Nepal attract zero duty. This leads to unhampered and easy influx of substandard Nepal tea being sold and re-exported as premium Darjeeling tea, which diluting the global brand image and affecting prices, the parliamentary panel said in its 171st report.

The panel has recommended setting up a robust administrative framework and import inspection regime, and establishing an NABL-accredited quality control lab in Darjeeling district to check each consignment of imported tea. The panel recommended an inspection by the Directorate General of Trade Remedies regarding the dumping of tea, while looking into the possibilities of an anti-dumping duty.

A Tea Board official told FE the board has already formed a committee on the issue following a direction from the ministry of commerce and industry to draw and test samples at an NABL-accredited lab. This is to check if imported tea is FSSAI-compliant.

However, PK Bhattacharya, secretary general of the Tea Association of India (TAI), said only a few parameters were being checked.

The tea board has directed importers to inform it about the storage locations of imported tea within 24 hours so that the board may draw samples. “Importers will have to ensure that origin of imported tea is mentioned in all sale invoices or contracts and there is labelling and proper display of the origin of tea,” the Tea Board official said.

The board has prohibited registered buyers from blending imported tea with Darjeeling, Kangra, Assam orthodox and Nilgiri orthodox teas, which have geographical indications (GI). Importers and exporters have to obtain a clearance certificate from the tea council portal before import or export of tea, the Tea Board official said.

According to TAI, duty-free imports of Nepal tea have been on the rise. “The fall in production of Darjeeling tea is matched by a corresponding rise in quantity of tea imported from Nepal. While the causes for diminishing production are multifarious, like changing climate, garden closures, excessive absenteeism among tea workers, unviable plantation and increasing cost of production, there is no denying that import of Nepal tea has caused the primary dent in the fortunes of the Darjeeling tea industry,” Bhattacharya said.

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Author: Howard Caldwell