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A quarterly newsletter published by EqualiTea, a project funded by European Union's Non-State Actors and Local Authorities in DevelopmentThe views expressed in this publication do not necessarily reflect the views of the European Commission.
ISSUE 05 | June 2012
TeaBoard of India (TBI) organised two conventionsof the small tea growers in Assam – one on 28 April2012 at TezpurUniversity, Sonitpur, and another on11 June 2012 at Golaghat District library hall.
According toTBIofficials, thepurpose of theseconventions was to spreadawareness among thesmall tea growers onformation of societies,improving field productivityand use of technology.Considering the significantcontribution the STGs aremaking towards thedevelopment of the teaindustry as a whole, TBIhas decided to give priorityto the growth anddevelopment of STGs.
Tezpur Convention
“Rs 300 crore has been earmarked under plan headfor development of the small tea growers,”
announced TBI Chairman Mr MGVK Bhanu whileaddressing the convention. “The Board wouldprovide 40 per cent subsidy to the small tea growersfor setting up factories, besides subsidy to purchase
vehicles for transportation oftheir produce,” he furtheradded.
While addressing theConvention, Tarun Gogoi,Chief Minister of Assam,emphasised the need forsmall tea growers tomaintain good quality oftheir produce for betterremunerative price. UnionMinister of State forDevelopment of NorthEastern Region andParliamentary AffairsMinister Paban SinghGhatowar, requested the
state government to regularise the land patta of
Tea Board Organises SmallTea Grower Conventions
C haa S am badthe voice of small tea growers
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Dinesh Kumar Sarmah, Vice President of All-Assam Small Tea Growers' Association andSenior Vice-President of Confederation ofSmall Tea Growers' Associations in India(CISTA), has been elected as the vicechairman of Tea Board for 2012-13. Thedecision was taken in its meeting held inKumarakom, Kerala, on June 22, 2012.
This is the first time in the history of Tea Boardthat any member from among small teagrowers has become the vice chairman. Itbroke the long-standing traditionof thepositionbeing held in one year by the chairman ofIndian Tea Association (ITA) representingNorth Indian tea interest, and in the next yearby the president of Upasi representing theSouth Indian interest.
There are 31 members in Tea Board includingthe chairman,who is an IASofficer. Therest of themembers areselected fromd i f f e r e n tstreams of theindustry. Thefull term of theBoard is threeyears.
Dinesh Kumar SarmahIs Vice Chairman, TBI
Recognising CEC's contribution to theempowerment of small tea growers in India,Tea Board of India, in its board meeting heldat Kumarakom on 22 June 2012, decided toenter into a working arrangement with CEC‘for motivation of small growers and formationof SHGS in NE region and North Bengal’. Thedecision of the Board (Item No. D-9) to accord‘approval of the working arrangement withCEC for the benefit of the small tea growers’was based on the recommendation of the
Development Committee.
Tea Board of India Enters into aWorking Arrangement with CEC
Ratneswary Borah, wife of late Soneswar Borah, thefounder of STG movement, was honoured by MrMGVK Bhanu, Chairman, Tea Board of India duringthe STG Convention, Golaghat on 11 June 2012.
Bank with subsidy fromTea Board. ...InKarnataka, the smallcoffee growers areavailing Plantation CreditCard like Kisan CreditCard, NABARD has nomaster plan to serve thesmall tea growers forcredit facility. So, we arerequesting you to pleaseannounce the creditfacility for small teagrowers ... & introduceplantation credit card forsmall tea sector inforthcoming financialbudget 2012-13.Crop InsuranceIn 2002-2003 financial budget, former UnionFinance Minister Sri P.Chidambaram hasintroduced “Agriculture Insurance Co. of IndiaLtd.” .... Already all the agriculture crops arecovered by this company and farmers aregetting insurance for their crops. The small teagrowers exclusively producing green tealeaves should be treated at par with farmers ofother agriculture sector. We are alsorequesting you to please introduce green tealeaves under the insurance scheme as cropinsurance of Agriculture InsuranceCo. of Indialtd. to protect the crop in the next financialbudget.Special Fund for STG DirectorateCreation of separate small tea growersdirectorate will help in better execution &monitoring of the schemes, in initiating pilotprograms on alternative market developmentfor small tea growers and in providingsystematic training & extension services. Thiswill also help the STGs to improve the qualityof green tea leaves and create a newdimension in tea industry to upgrade theSTGs
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Greetings to you from Confederation of IndianSmall Tea Growers Associations (CISTA) !...We convey our sincere gratitude and heartiestthanks to Ministry of Finance & Ministry ofCommerce, Government. of India for taking theinitiative to setting up Small Tea GrowersDirectorate.Now in India nearly 2 lakhs small tea growers arecultivating tea. At present small tea growers inIndia account for more than 26% of the total teaproduction compared with just 5% in the early1990s. ...We place before you that the followingsuggestion for your urgent attention in order toensure sustainable livelihood development ofSTGs of India in our pre-budget memorandum.Plantation Credit CardThe small tea growers are local, sons of the soil,mostly are first generation entrepreneurs & spendlocally. ...Nearly 15 lakhs people are directly orindirectly involved with this profile whereeducated, uneducated youth from rural, semi-rural, people frombackward&minority classesareengaging themselves for self employment.Unfortunately these small tea growers ...are notbeing entitled to avail the loan from Bank. ...Inabsence of financial backup, most of the smallplantations could not be developed on soundscientific line as the growers could not plan wellahead of execution. The small tea growers arenothing but farmers as they produce highlyperishable agriculture product like tea leaf withoutany factory of their own. The attitude of financialinstitutions towards small tea growers arenegative where estate or corporate gardens areenjoying bank loan in agriculture interest rate ....Even bought leaf factories are getting loan from
CISTA's Letter to FinanceMinister:Excerpts
small tea growers to allay all apprehensions fromtheir minds.
Golaghat Convention
While addressing the convention at Golaghat, theTBI chairman urged the small tea growers to formsocieties and to set up their own processingfactory subject to twoconditions: (1) a secondfactory cannot be set upwithin 5 kilometres of anexisting factory, and (2)the factory must beowned by members ofsmall tea growers’society set up for thepurpose. He assuredthat 25 per cent of the costfor setting up a factory would be provided by TeaBoard, which would also give the required licenseto such factories.
In the technical session, scientist of TRA Dr BBBaruah concentrated on the technical aspects ofagriculture; Professor of Assam AgricultureUniversity Dr Taparia talked about farmers asentrepreneurs; CISTA president Mr Bijoy GopalChakrabarty shared his experiences from hisKenya visit; and executive director of CEC Mr J
John spoke on the role ofsocial technology in theformation of primaryproducers’ societies.
EqualiTea
On invitation from TeaBoard of India, CECattended both theconventions. Addressing
the large gathering of smalltea growers, J John said, "Small tea growers candirectly acquire the benefits being offered by theTea Board and move up the value chain, but onlyif they collectivise themselves into producer
societies and take control of their own destinies."
He explained how CEC had helped the small teagrowers in Nilgiri region to organise into primaryproducers’ societies, to engage in collective leaftrade avoiding leaf agents, and to improve theiragricultural practices. He said collectivisation hadimproved their self-image and dignity, andprovided appreciable economic benefits due tobetter realisation of prices for green leaves. Healso informed that CEC, in collaboration with All-AssamSmall Tea Growers’ Association and otherstate associations, is replicating this work inAssam, West Bengal, Tripura, Mizoram andArunachal Pradesh. The project is financiallysupported by the European Union and is beingexecuted in collaboration with Traidcraft, UK.
STG ConventionsFROM PAGE 1
"Small tea growers candirectly acquire the benefits beingoffered by the Tea Board and moveup the value chain, but only if they
collectivise themselves intoproducer societies and take control
of their own destinies"
from green tea leaf producer to made tea producer. InSrilanka, Tea Small Holding Development Authority(TSHDA) & in Kenya, Kenya Tea DevelopmentAuthority (KTDA) who are dedicated agency for smalltea growers development are showing thesustainability in the export market. So, we hope that inthe Union Budget 2012-13 ministry of finance willprovide special and adequate fund for the STGsDirectorate for its smooth functioning.Subsidised FertilizerRegular supply & affordable rate of fertilizer is one ofthemost important feature that determine thequality ofgreen tea leaf and better yield. Recent price hike ofurea & mainly of potash has created a huge financialloss to the STGs. If it is going on in future, then STGswill be not be able to use fertilizer in the smallplantations. Ultimately crop will be effected. Werequest you to please announce subsidized fertilizerquota for the STGs.We hope that our suggestionswill bematerialisedwithyour proactive support in the forthcoming unionbudget, 2012-13.Thanking you,Bijoy Gopal ChakrabortyPresident, CISTA
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The project 'Sustainable Livelihoods for Small Tea Growers' envisages formation of primary producers'societies (PPSs) of growers who engage in collective leaf trade directly with bought leaf or estate factories.Some among them might graduate to the production of processed green or black tea. This column tracksthe progress of these growers in Assam, West Bengal, Tripura, Arunachal Pradesh and Mizoram.
Small Tea Grower Collectives in Tripura
Kofeucha, a collective of 300 small tea growersformed in 1994 — named after the three villagesKohargaon, Fetanigarh and Udaipur, has beenassured by Tea Board of a license to set up its ownprocessing unit, in a move that will certainlyencourage others to follow suit.
The largest and the oldest SHG among small teagrowers in Assam, members here have theirgardens (‘cha’ stands for tea).
This new development is expected to bring to anend their perpetual complaint of being offered lowprices by bought leaf factories and factories ownedby the bigger gardens for their green leaf.
The Tea Board will provide a 40 per cent subsidy toset up the factory, which is expected to cost nearlyRs 3 crore. “Setting up of our own factory will be thebeginning of a new chapter for small tea growers inthe state. Within the next couple of years we arehopeful of coming out with our own brand of tea,”
Cheniram Khanikar, chief adviser of the self-helpgroup, stated to the media.
Tea Board has decided to issue biometric smartcards to small tea growers. This step will totallyeliminate all paperwork that is presently required forregistration of small tea growers. The Board hasrelaxed a number of conditions for small teagrowers to get registered.
At the moment, only about 5,000 small growers areregistered. Only a self-drawn map of the cultivatedarea and a landholding certificate will be required;no soil analysis map will be necessary. The Boardhas also decided to create awareness amongst thegrowers through a series of conventions.
A group of young people from Assam, belonging tothe indigenous Moran community in the village of
Kakojan in Tinsukia District, located about 20kilometres away from Doomdooma, have set up anorganic tea-processing unit. It is founded onindigenous and traditional knowledge and technicalinputs.Marketed in the localmarkets as a chemical-free health drink, it is already popular under thebrand name of ‘Piyola Tea’.
The group started their venture in 2010-11. Theirproduction stands at one quintal on three acres oforganic garden, and this year they are expecting todouble their production.
In spite of their enthusiasm to go beyond the localmarket, they are hindered by various factorsincluding limited exposure to technology,infrastructure, working capital, licensing and propermarketing network. Their endeavours can createemployment and generate income that willempower the people of this region socially andeconomically. The group expects policy supportfrom government and suport from financialinstitutions. Their key concern, though, remains aregular market for their products.
Tea News
Primary Producer Societies formed in TripuraPrimary Producer Societies formed in TripuraPrimary Producer Societies formed in TripuraPrimary Producer Societies formed in TripuraPrimary Producer Societies formed in TripuraPrimary Producer Societies formed in Tripura
Name of Society No. of members Area Location President Secretary
Dudbari STG Society 51 60 Kamalpur,
Dhalai, TripuraSwapan Namasudra
Gouranga Debnath
Kathalbari STG Society 33 50 Kamalpur,
Dhalai, Tripura Subhas Das Ramani Mohan Das
Basumati Khudar Cha Utpadak Samity
51 170 Sipahijala, West, Tripura
Harisankar Debnath Dilip Das
Gabtali Khudra Cha Utpadak Samity
30 130 Sipahijala, West, Tripura Rustam Alom Aalimiya
Bagchara Maitryvelly Cha Utpadak
50 95 Langtaraivally, Dhalai, Tripura Sailen Sarkar Banka Munda
Simna STG Society 44 70 Sadar, West,
TripuraJoti Roychouduri Khokan Nayek
Mayachari STG Society 58 160 Kamalpur,
Dhalai, TripuraBarendra Debbarma Rajesh Gowala
Panchamnaga STG Society 60 200 Kailasahar,
Unakoti, TripuraRamesh Debbarma
Prafulla Debbarma
Fathickchara STG Society 54 115 Kumarghat,
Unakoti, Tripura Biralal Riang Danya Manik Debbarma
Chagaldema STG Society 62 130 Kailasahar,
Unakoti, Tripura Sanju Debbarma Swapan Debbarma
Kofeucha to have its Tea Factory
Biometric ID Cards for STGs
Innovative Venture by Assam Youth
Pallavi Mansingh9810393391
[email protected] Roy9609761867
[email protected] Goswami9957309749
[email protected] Goyari8011008314
[email protected] Pashi9436923630
[email protected] Hazarika9435670378
[email protected] Das9508760636
[email protected] Boruah9957346526
The TeamJ John
Centre for Education andCommunication173-A, Khirki Village, Malviya NagarNew Delhi – 110017T: 91 11 29541858 / 29541841F: 91 11 29542464 E:[email protected]: www.cec-india.org
Is Agricultural Income Tax on Small Tea Growers Justified?
In recent times, the most uttered question by the small tea growers’ communityto government agencies is whether they are farmers or industrialists. If they arefarmers, thenwhy should not they enjoy all the amenities provided to farmers bythe agriculture department?
This confusion exists because of confusing government tax laws anddocumentation processes. The central government has been empowered byEntry 82 of the Union List of Schedule VII of the Constitution of India to levy taxon all income other than agricultural income. In persuasion of this objective, thecentral government had formulated Income Tax Act, 1961. On the other side ofthe story, we have Bengal Agricultural Income Tax Act, 1944, which wasintroduced after abolition of the zamindari system in Bengal. According to thisact, ‘if any assessee derives income from sale of green tea leaves, it becomeshundred per cent agricultural income’ and it is taxable under this Act. Fromfinancial year 1993-94, all individual growers growing crops other than tea havebeen given exemption under the Act.
Hence, the question arises: if it is a completely agricultural activity, then whyshouldnot small teagrowers receivebenefits under theagriculturedepartment?
In the case of estate gardens, the central government has segregated totalincome into two parts at 60:40 ratio. The central government does not chargeanything on the 60 per cent of the estate garden income, assuming that 60 percent is agricultural activity, and so, income pertaining to that portion will beexempted and it will be charged under Bengal Agricultural Income Tax Act,1944. It was upheld in the case Tata Tea Ltd & Another vs State ofWest Bengal& Others in the year 1988. The single judge bench of the Calcutta High Court,ruled that after assessment theincome tax officer (for short,‘ITO’) could levy the tax on 40 percent of the income in accordancewith the provisions of the IncomeTax Act, 1961, and the balanceamountmight beassessedby theagricultural income tax officer totax under the Bengal AgriculturalIncome Tax Act, 1944 . The courtfurther directed that if anyassessment order had alreadybeen passed contrary to theaforesaid directions, such ordermust stand quashed and a freshassessment order should bepassed in accordance with law.
From the decision of the court it isquite evident that tea growing is acomplete agricultural activity andthat it is subject to tax under theState Act.
Tea cultivation in this part of thecountry, or perhaps all over India, has become a very costly affair with increasein input prices. Moreover, there is no mechanism to ensure that small growersget a fair price. The court decided that 60 per cent of the income comes from thefield, but if we do a value-chain analysis of small tea growers’ business system,we will find that 60 per cent of the cost is borne by the small growers and theyget only 10 per cent to 20 per cent of the income share from the bought leaffactory. Tea being a forward-integration industry, themaximumprofit accrues atthe top of the value chain, and so, this assumption of 60 per cent incomeaccrualat the agricultural activity level needs a relook.
Due to the changing face of the business, small tea growers are the mostvulnerable section of the industry, having been exposed to massive volatility inthe green leaf market in the absence of any decisive measure to value theirproduct; consequently, they stay at the bottom of the value chain, where value
accrual is minimum and risk is high. In this situation, growers need some relieffrom the tax burden because agriculture income tax will become a new burdenon their shoulder. Small growers are new-generation growers and they are yetto develop a business mentality. They still look at tea as any other farmingoccupation and maintain no records at all, because of which finding the exactincome will be really difficult. Moreover, this sector is largely unorganised andmost of the growers are dependent on the agents; as a result, most of the timethey do not receive the proper price for their produce. Unless these loopholesare fixed, taxing the growers will only add insult to their injury.
To cultivate tea it is obligatory to receive a no-objection certificate (NOC) fromthe government, and to get the NOC one has to get a mutation and conversioncertificate from the government. These certificates are normally required to setindustry on any land. On the one hand, the government is looking for thesecertificates to give permission for tea cultivation, and on the other hand, theywant the growers to pay tax on their income under the Bengal AgriculturalIncome Tax Act, 1944. What an irony!
Bengal Agricultural Income Tax Act, 1944, has two sets of rates: one for theindividuals and another for the assessees other than individuals that includespublic andprivate companies,BOI, andAOP.Theexemption limit under theActis only INR10,000 for individuals, and for other assesses there is noexemption.They pay 30 per cent straight on the exemption received under the Income TaxAct, 1961. Income Tax Act allows exemption on up to INR 180,000 forindividuals, but in the case of Bengal Agricultural Income Tax Act it is only INR10,000; even the depreciation rates allowed under the Act is higher than therates specified in Companies Act, 1956, or the Income Tax Act, 1961. So, the
amount chargeable under thishead is also very high. Thisfactor certainly needs a relook;otherwise it will impose atremendous amount of burdenon thesmall growers. In absenceof a proper pricing mechanismthere are already someproblems that the growers arefacing, and now the imposition ofthis Act will make the situationeven worse.
Jalpaiguri District Small TeaGrowers’ Association has beenfighting against this decision foryears. They organised a massrally on 10 August 2012 to marktheir protest against thisdecision. The secretary of theassociation Mr Bijoy GopalChakrobarty had said, “We arecompletely responsible aboutour duties to the nation. So weare ready to cooperate in any
way, but we still feel that the government should be sensitive towards ourproblems as well.”
The question is when all other crops have been exempted, why not tea? Thesmall growers want the government to relook at the context of the small teagrowers operating in the region before imposing any Act on them.
Hopefully, the government will decide on the issues in such a way that growershave a brighter tomorrow while performing their duties to the nation.
Kaustav [email protected]