India begins doling out aid to boost quality tea production

India on Monday began distributing 1.2 billion dollars in aid to help tea planters facing a decade-long slump in tea prices caused by stiff competition in the global market. The package, first announced last May, aims to boost India's production of high-quality tea to increase exports and fend off challenges from new tea-growing countries.
"More than 50 percent of the total project money would be utilised for replanting and rejuvenating almost all the 800 tea plantations in Assam," said junior commerce minister Jairam Ramesh in Assam's main city Guwahati.
The minister on Monday handed out 480 million rupees to 82 tea estates in the north-eastern state - the heart of the country's tea industry - which grew more than half the 955 million kilograms (2.1 billion pounds) India produced in 2006.
The country's 1.5 billion-dollar tea industry has been in crisis since 1998, with prices and exports dropping because of a glut in the world market, forcing 70 of Assam's 800-plus tea gardens to close down.
But after replanting aging bushes that are more than 50 years old, India's output of expensive premium Assam tea is expected to jump 40 percent. "Right now a hectare of land yields about 1.7 tonnes (3,740 pounds) of tea and after replanting and rejuvenation, the production is expected to be around 2.2 to 2.3 tonnes per hectare in the next 15 years," the minister said.
India has tried to work its way out of the slump by marketing itself as a producer of top-notch teas and by trying to spur domestic tea-drinking, which has seen prices in weekly auctions in Assam rising this year. Planters in the region are hopeful the package will help further revive the Indian tea industry. "This is a long-term plan," said Bolin Bordoloi, head of the Assam operations of the Tata Tea group.
"We are quite optimistic about productivity and improving quality once many of the tea bushes are replanted or rejuvenated." The tea funds will be disbursed over 15 years, eventually reaching 1,000 of India's almost 1,600 plantations, with 25 percent of the money also going to tea plantations in West Bengal and the hills of southern India.