Tea sector needs addressed
Businessworld — March 1, 2005

Percy Siganporia
Two major requests of the tea plantation industry have been addressed — removal of additional excise duty at Re 1 per kg and thrust on incentives for replanting and rejuvenation. These measures would contribute towards reduction in cost of production and address the viability of the plantation operations. The decision to define a road map for agricultural diversification into fruit, flowers, dairy, fishery and so on will help in supplementing and increasing the returns of tea plantations.

The agricultural diversification along with credit availability through micro financial institutions will provide a source of alternate income to the tea workers and reduce corporate social cost burden. The main enabler for growth of the branded tea business from this year’s Budget has been the implementation of the VAT rate of 4 per cent across all states. This is the one of the best news for the Tea Industry. The initiatives to promote agriculture, infrastructure and rural economy has a consequential lag impact of boosting demand for tea consumption.

A combination of measures in the financial sector will improve rural entrepreneurship and will open up distribution and product placement opportunities. These will enable the FMCG operations to flourish for tea.

The finance minister’s initiatives to raise the country’s tele-density from the current 8.75% and get over 66,000 villages wired to the world are welcome. The importance given to education is long overdue. The highest ever outlay on education, and the decision to create Rural Knowledge Centres, each of which will have at least one computer, will have far-reaching impact. The move towards public-private partnerships in the ‘Skills Development Initiative’ for upgrading industrial training institutes is an exciting trend.

The minister also desires to create institutions of great learning in India comparable to Oxford, Cambridge, Harvard and Stanford and he has chosen my alma mater, the Indian Institute of Science, Bangalore, as the pilot project. This recognises clearly the role of knowledge in today’s world as world-class universities are critical for the country to leverage its pool of knowledge workers. Also, institutions like the IISc can well become a hub for cutting edge R&D. And, if the IT industry is to create 70 lakh more jobs by 2008, many more institutions will have to follow its path.

The only area where the Budget has failed to push the envelope is to enhance the adoption of IT in the country, especially in the e-governance area, although some initiatives were taken last year. Adoption of IT in governance needs a fillip especially with the implementation of VAT, and to keep tabs on the development schemes announced. Further, while basic education has been emphasised, little has been done to integrate IT education with mainstream education — a step critical to ensure the steady supply of IT professionals in the country.

Another significant proposal is the minister’s announcement to make Mumbai a regional financial hub. Though to make it a regional financial nerve centre will mean renewed investment in the technology and communication aspects of FIs, and best global business and tax practices. The IT industry is well positioned to further strengthen FIs in terms of the latest technologies and practices.