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Ceylon tea exports to India under the India-Sri Lanka Free Trade Agreement are likely to continue to enjoy a concessionary import duty, Forbes and Walker Tea Brokers said, quoting a Tea Board communique.
It is projected that Ceylon tea exports to India under the free trade pact will enjoy a concessionary import duty of 7.5 per cent for the allocated quota of 15 million kilos a year, they said. The Government of India has increased the import duty on tea from 35 per cent to 70 per cent in the budget proposals for 2000/2001 presented to the Indian parliament last month.
Accordingly the Finance Ministry in India announced on March 1 that the import duty on tea among some other items have been hiked from 35 per cent to 70 per cent with immediate effect.
Moreover the Finance Minister of India also announced the raising of the investment limit qualifying for tax exemptions for the tea industry (development allowance on profits) from 20 per cent to 40 per cent. This additional allowance will be used only for re-plantation, rejuvenation and modernisation of tea plantations as well as processing facilities.
According to the agreement with the World Trade Organisation (WTO) India was compelled to lift the restrictions of tea imports to its domestic market from March 1. Therefore the Finance Minister of India Yaswant Singha has formulated a protective measure to domestic tea producers by raising the import duty on tea from 35% to 70%.
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