NBR Likely to Impose 25 Percent RD on Import of Tea in Bangladesh

The government of Bangladesh is set to impose heavy duty on import of tea, as its increased import has been affecting the local tea growers, sources said.

The National Board of Revenue (NBR) is likely to impose 25 per cent regulatory duty (RD) on import of tea. The decision might come into effect soon.

The local tea industry has demanded of the government to discourage tea import following a gradual decline in auction of tea due to a substantial increase in tea import from different countries.

Local tea industry sources, however, said the country cannot meet the demand for quality tea through local production.

Almost 20 to 25 per cent of the locally produced tea is of bad quality, and prices of good quality tea are rather high, said a local tea grower.

Usually in tea auctions, some tea varieties are sold at Tk 60 per kg, while those of higher grade are sold at Tk 180 kg, he added.

Unless the country ensures adequate production of good quality tea, the import of the item cannot be checked. Traders would continue to consider import of quality tea profitable even after paying 60 or 80 per cent duty, he said.

The existing tax rate on import of tea is 59 per cent, according to the NBR.

"The government can rather reduce duty to create a competitive market and encourage production of quality tea," he added.

The sector insiders said the local tea industry will grow significantly in line with the change of lifestyle of the people and economic growth of the country.

He also underscored the need for availability of an adequate amount of fund to the sector to increase production of quality tea and facilitate its export, after meeting the local consumption.

However, Md Safwan Chowdhury, chairman of Bangladeshiyo Tea Sangsad (The Council of Bangladesh Tea), expressed different opinion on import of tea.

"The country's annual tea consumption is 53 million kgs, while production is 60 million kgs. There is no need to import tea, as we can produce 7.0 million kgs of additional tea every year," he said.

The import of tea increased significantly this year, because the tariff structure is still in favour of the importers. In 2011, around 6.0 million kgs of tea have been imported so far, hitting the local tea growers hard, he said.

"Our neighbouring countries discourage import of tea. There are mandatory rules about re-exporting after blending imported tea in those countries," Mr Chowdhury added.

In August, the NBR suspended its rule on deduction of tax at source on auction of tea sale, following the demand of the local businessmen and also at the instruction of the finance minister.

In the budget for current fiscal, the government imposed 5.0 per cent tax at source on tea sale price. After imposing the decision, weekly tea auction came to a halt, the sources noted.