GUWAHATI, July 8 ? The Government of India?s decision to allow 100 per cent foreign direct investment (FDI) in tea industry in the country has failed to raise hopes for the crisis-ridden tea industry in Assam. Sources in the tea industry in the State informed that for the tea sector in Assam which has been going through a bad patch of late, the Government of India?s decision allowing FDI has come a bit late. With the tea prices falling steeply, decline in export volume and shrinking of even the domestic tea market due to invasion by Cola giants and coffe brands, the overall environment is not at all conducive to attract substantial FDI in the tea sector. Moreover, the constant threat from militants in Assam will also scare away prospective investor from abroad.
Sources in the industry informed that the rider attached to the GOI?s decision to allow 100 per cent FDI in tea sector would also serve as a deterrent to investors. The GOI has attached a condition that the foreign investors will have to disinvest 26 per cent of their total investment in the tea sector to an Indian partner at the end of the fifth year from the date of investment. This condition has somewhat liquidated the opportunities thrown open in the form of permission for 100 per cent FDI in the tea industry in the country which is passing the through the worst phase in its history. There is not much chances of FDI flow to tea industry in the State considering that no foreign companies will be interested in investing huge sums of money in large number of family owned gardens in the State as most of which are in bad shapes, deep into debt.
Barring a couple of flourishing groups, operating in Assam George Williamson, Goodrickie, foreign partners have already sold off their stakes to Indian companies or partners in case of all other agency tea houses over the years due to the grim tea scenario in Assam in particular and the country as a whole. The trend is not going to reverse in the near future despite the GOI?s decision to allow 100 per cent FDI investment.
However, industry sources ruled that the Government decision on FDI would drive the last nail in the coffin of the already fledging small tea growing sector in Assam. ?FDI or no FDI in tea sector, small tea growers will be able to survive only if they can improve the quality of their green leaves,? the sources said. According to sources in the tea market, when price of tea is crashing in the market, green tea leaves prices are bound to suffer and small tea growers will have to accept it. And the Government cannot provide support price for green leaves produced by small growers.