Bought leaf tea manufacturers mull nation-wide union to highlight their cause

The Bought Leaf Tea Manufacturers Association plans to form an all-India federation to highlight their issues with the authorities.

The proposed body to be known as the Federation of the Indian Tea Manufacturers Association (FITMA) will serve as a unified platform to advocate for policy changes and push for a level playing field across the sector, said Dhananjayan Krishnamoorthy, President of Nilgiris Bought Leaf Tea Manufacturers Association. The idea of forming a nation-wide federation was mooted by Assam Bought Leaf Tea Manufacturers and both Siliguri and the Nilgirs have extended their support, he said.

He pointed out that the Bought Leaf Tea (BLT) manufacturing sector remains the most heavily regulated segment in the entire tea value chain. All major regulations of the Tea Board have been targeted exclusively at the bought leaf sector, while estate factories, brokers, buyers and exporters continue with minimal oversight.

PSF recommendations

Krishnamoorthy, who attended the recent stakeholders meeting in Kolkata, told businessline that the recommendations on the Price Sharing Formula based on a consultant report is yet to be implemented after eight months. A major reason for the delay could be the recommendation to mandate the PSF for all buyers of green leaf from small tea growers, including estate factories. Estate factories procure 20-30 per cent of their green leaf requirements from small growers, but are currently not required to follow the price sharing formula. Implementing this would bring long-needed fairness to the system, he said.

Central to the sector’s dissatisfaction is the District Average Price (DAP) mechanism introduced by the Tea Board in 2015. The DAP has faced widespread resistance from both bought leaf manufacturers and small tea growers with multiple legal challenges filed over the years. Stakeholders argue that DAP does not reflect in real market dynamics and unfairly penalises manufacturers who pay higher prices or are forced to sell at lower margins, he said.

He also called for urgent implementation of the Ramaseshan Committee report, which focuses on reforming the auction mechanism to ensure fairer price discovery. Without these reforms, the auction system continues to tilt in favour of large players, leaving BLT manufacturers disadvantaged, he said.

Published on April 24, 2025