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Tea e-auction hit by sfus on Day 1

Tea players in Assam were also apprehensive about the system, citing a State government legislation which only allows buyers registered at the Guwahati tea auction centre to buy Assam tea.

By Our Staff Reporter

Guwahati, June 23: Technical glitches marred the first day of the pan-India e-auction of tea, with little or no trading at the auction centres across the country.

The e-auction, launched on May 9, was scheduled to begin on Tuesday, but it was deferred by two days due to glitches in post-sales settlement.

“There was barely any trading today due to technical glitches. The Guwahati centre could not connect with the Coonoor centre. There were technical problems even at Kolkata as brokers were uble to log into the system. At Siliguri, around 80 percent of the tea on offer went unsold as only a few major companies like Tata, HUL, Duncans participated,” said an official source.

At the Guwahati centre, the auction continued for little over an hour.

No buyer from outside procured Assam tea today, due to lack of clarity on issues related to sales tax.

Producers in Assam were left fuming after today’s session as it was the second-flush harvest time – considered by many as among the finest tea in the world. “If the trading of the second flush faces such hiccups, it is not a good sign. The government should have introduced the system in the lean period, and not at this peak season time,” said a tea planter.

Tea players in Assam were also apprehensive about the system, citing a State government legislation which only allows buyers registered at the Guwahati tea auction centre to buy Assam tea.

“In this new pan-India e-auction, you will have buyers from across the country. If a buyer not registered at Guwahati books a product of Assam, there will be technical issues in the billing due to the State legislation. The government has not yet clarified the issue,” said a member of the Guwahati Tea Auction Centre.

There were pre-conceived apprehensions among the tea industry players about operatiol matters pertaining to the new pan-India electronic auction system, but the Central government had decided to enforce the new arrangement.

The new system ebles buyers registered with a single auction centre to participate in the auction process of other centres as well.

Till now, the existing electronic auction process is region- and centre-specific, with restrictive participation of buyers as only those registered at a centre could participate in its auction process.

There are seven auction centres in India – Kolkata, Guwahati, Siliguri, Jalpaiguri, Kochi, Coonoor and Coimbatore.

Manual auction of tea in India started in 1861 and the region- and centre-specific electronic auctions commenced in 2009.

However, Darjeeling tea is coming to the electronic platform for the first time.

According to Tea Board data, about 534 million kg is sold through the e-auction system.

Industry players raised a host of issues concerning the rules of the new auctioning system including the post sales tax and banking settlement, among others. Buyers, sellers and brokers have also sought more settlement banks in the system instead of just one settlement bank – the Bank of India.

Among many apprehensions, the industry players sought proxy bidding which is not allowed in the new system.

“Proxy bidding is not allowed. We are allowing associate IDs by which they can engage their associates to bid on behalf of them (buyers). This was thought of as a mechanism to prevent cartelisation and to bring in more players and competition into the system,” the Tea Board said.

Earlier, multiple buyers could desigte one person as a proxy bidder. One proxy bidder could represent multiple buyers. In the new system, each buyer will have to participate on his/her own or through his/her associate IDs.

About the author

Ankur Kalita