Four prominent tea producer associations from Assam and West Bengal have formally requested Prime Minister Narendra Modi to withdraw or amend a government notification mandating that they sell no less than 50 per cent of their annual tea production through public auctions. The associations involved include the Assam Bought Leaf Tea Manufacturers Association (ABLTMA), North Eastern Tea Association (NETA), Bharatiya Cha Parishad (BCP), and North Bengal Tea Producers’ Welfare Association (NBTPWA).

The request follows the Tea (Marketing) Control (Second Amendment) Order, 2015 and the Tea (Marketing) Control (Amendment) Order, 2024. The notification was initially issued by the Ministry of Commerce and Industry on October 1, 2015. It required that all registered tea manufacturers sell at least half of their annual production via public auctions, also allowing the Registering Authority to modify this percentage with prior government approval.

Despite the existence of this provision for several years, its implementation has been limited. Recent communications from the Registering Authority indicate a renewed effort to enforce this mandate, prompting the associations’ concerns regarding its implications for tea producers.

Concerns Over Auction System and Costs

In their correspondence, the tea producers highlighted the significant transaction costs and extended selling cycles associated with public auctions. They claimed that historical attempts to enforce compulsory sales through auctions have not been fruitful, stressing that such a system imposes financial disadvantages on producers.

The letter indicated that selling tea via public auctions costs about Rs 10 per kilogram, which amounts to nearly 5 per cent of the average selling price and often surpasses the net profit margins of many producers. The associations included details on the financial hardships their members face due to these mandatory auction sales.

Additionally, the producers referenced the findings of various expert committees from the Tea Board, which have evaluated the auction system. While these committees suggested enhancements for efficiency, none recommended the enforcement of mandatory auction sales, highlighting the complexities and inefficiencies of such mandates.

Call for Flexibility in Sales Methods

The tea producers argued that the auction requirement infringes upon their rights to operate freely within the market. They asserted that the current mandate is inconsistent with the Government of India’s objective to promote Ease of Doing Business, advocating instead for flexibility in choosing their sales channels.

Specifically, they pointed out that the directive requiring 100 per cent of dust grades to be sold through public auctions between 2024 and 2025 has been ineffective, leading to increased costs without achieving its original goals. They noted that despite this failure, the Tea Board has chosen to extend the auction requirement for an additional year starting January 1, 2026.

In conclusion, the associations emphasised that the mandating of public auction sales constitutes a breach of their fundamental rights, specifically regarding their ability to conduct trade and business freely. The request to the Prime Minister underscored their desire for regulatory flexibility in light of the ongoing challenges posed by these auction mandates. They are seeking a more viable and less burdensome approach to selling tea.

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