Commerce Ministry makes auction route must for dust tea in India

The Union Ministry of Commerce and Industry has made it mandatory for dust grades of tea produced in India to be sold through public tea auctions.

A gazette notification issued by the ministry last week also said that at least 50 per cent of other grades of tea – orthodox and the granular CTC (crush, tear and curl) – should reach the markets through the auction route.

“Every registered tea manufacturer shall, on and from the date of commencement of the Tea (Marketing) Control (Amendment) Order, 2024, sell (i) not less than 50 per cent of total tea manufactured in a calendar year... and (ii) 100 per cent of dust grades tea manufactured in a calendar year in its manufacturing units through public tea auctions, held under the control of the organiser of the tea auction licensed to do so under this order,” read the notification issued by the Commerce Ministry.

Except mini tea factories, the ministry order is applicable for tea manufacturing units in seven northeastern states -- Assam, Tripura, Arunachal Pradesh, Meghalaya, Mizoram, Nagaland, Sikkim -- along with Bihar, Himachal Pradesh, Uttarakhand and West Bengal.

The Tea Association of India (TAI), one of the key bodies of tea planters and producers, said that it has been advocating the adoption of the public auction route as a single sales channel to ensure “fair price discovery” as the tea industry is “facing unprecedented challenges and is on the verge of collapse”.

Several tea estates bypass the tea auction centres and choose to go for direct selling, where the buyers dominate the prices.

Thanking the Commerce Ministry, TAI President Sandeep Singhania said that in response to the challenges facing the tea industry, the proposal for 100 per cent auction commencing with only dust grades has been put forward.

Dust grades constitute approximately 20 per cent of the total tea production in North India.

“We understand that implementing such changes comes with certain uncertainties and challenges. However, given the urgency of the situation, we believe it is necessary to test innovative solutions with full support for one season, and assess their effectiveness and potential impact,” Singhania said.

"The proposed 100 per cent dust auction signifies a bold move forward, and we encourage all the stakeholders to approach this trial with an open mind and spirit of collaboration," he added.

Assam, which produces roughly 55 per cent of India's tea, has more than 10 lakh tea workers in the organised sector, working in about 850 big estates. Besides, there are lakhs of small tea gardens owned by individuals.

The tea belts of the Brahmaputra and Barak valleys are home to more than 60 lakh people.

After Assam, Tripura is the second largest producer of tea in the northeastern region, producing around 10 million kg of tea annually.