tea garden setup
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In this article, Akanksha Mathur of National Law University, Delhi talks about the permissions, licenses, registrations and clearances necessary to establish a tea garden.

The Indian tea industry is one is the oldest and largest in the world, accounting for 31% of global production. It is extremely labour intensive and is the largest employer in the country after the Indian Railways. The tea industry has always enjoyed the government’s support due to its status as a mass employer. Thus, the government has often provided international support to the industry by lobbying extensively with the WTO and passed resolutions to provide domestic support to it.

Anyone looking to set up a tea garden, then, would have to comply with a number of laws and regulations.

Regulatory Authorities

The tea industry, under an Act of the Parliament, is under the control of the Union government. A number of authorities have been set up to regulate the tea industry in India.

  • Tea Board of India

The Tea Board of India is a regulatory agency established by the Government of India through Section 4 of the Tea Act, 1953. It aims to promote the domestic trade, export, cultivation and processing of tea in India. Its genesis dates to colonial India, when the Indian Tea Cess Bill was  passed in 1903.

The Tea Board is separated into a number of standing committees, such as the Executive Committee, the Development Committee, the Labour Welfare Committee, Export Promotion Committee and the Licensing Committee.

The Tea Board of India is responsible for-

    • Issuing a wide number of licenses to tea manufacturers and sellers
    • Assigning certification numbers to exports by tea merchants
    • Endorsement of production and productivity of tea
    • Financial support to research organisations
    • Monitoring advances impacting health, such as those in packaging
    • Coordinating between research institutions, tea traders and government bodies in order to ensure support to global tea trade.
  • Trustea

Trustea is an initiative led by the Tea Board of India and jointly funded by The Sustainable Trade Initiative (IDH), Hindustan Unilever Limited (HUL) and Tata Global Beverages Limited (TGBL).

It aims to develop and implement a sustainability code for the Indian domestic tea market and transform the Indian tea industry is based on industry realities and globally accepted sustainability principles.

  • FSSAI

The Food Safety and Standards Authority of India (FSSAI) is the apex statutory authority created for laying down scientific standards for the manufacture, processing, storage, importing and distribution of different food products in the country. Established under the Food Safety and Standards Act, 2006, it is tasked with ensuring the availability of safe and wholesome products for consumers.

Regulations Governing Tea Gardens

Tea Act, 1953

The Tea Act, 1953 was enacted to provide for the control of the tea industry by the Union Government in pursuance of certain international agreements.

It established control over the cultivation and export of tea from India. The primary regulatory authority for tea in the country, the Tea Board of India, was set up under this Act, and a customs duty was levied on the tea exported from India.

Regulatory Provisions

A number of regulatory provisions have also been passed by the government under the Tea Act.

  • The Tea (Marketing) Control Order, 2003

    • The Tea (Marketing) Control Order of 2003 was the successor to the Tea (Marketing) Control Order, 1984. According to the TMCO 1984,-
      • No person can carry out manufacturing activities except under valid registration from the Tea Board for a unit controlled and operated by him.
      • Shareholders such as manufacturers, brokers and auction organisers were required to obtain a license or registration before participating in or conducting auctions.
    • The TMCO 1984, however, did not provide for registration of buyers, quality adherence or sharing of sale proceeds between manufacturers and tea leaf suppliers. Thus, the TMCO 2003 was passed, containing the following features-
      • Registration of buyers and manufacturers of bulk tea with earlier provisions for registration of manufacturers of loose tea licensing of brokers and auction organizers.
      • Cancellation /suspension of registration of buyers with earlier provision for cancellation of registration of manufacturers;
      • Adherence to quality standards of tea as laid down under PFA Act 1954 by manufacturers /buyers and brokers.
      • Fixation of price sharing formula for sharing of sale proceeds between the manufacturers and tea leaves suppliers based on the sale proceeds of made tea.
      • Provisions for the sale of made tea outside public auction by registered manufacturers to registered buyers (including consignee or commission agent) except sale through own retail outlet or brokers directly to consumers.
      • Provision for drawing of a sample from suspected tea to ensure its conformity to the PFA standard.
    • The Tea Board was allowed to issue directions to increase the efficiency of the public auction system.
    • This Order allows for the registration of-
      • Tea Manufacturers Unit
      • Buyers
      • Auction Organizer/Broker
    • An amendment was also made to-
      • To register manufacturer and buyer within 90 days from 1.1.2003 instead of 60 days stipulated earlier.
      • To reduce the licence fee /registration fee by 50%.
      • To change the periodicity for the submission of return by buyers from monthly to quarterly.
  • The Tea (Distribution & Export) Control Order, 2005

The Tea (Distribution & Export) Control Order, 2005 was issued under the Tea Act, 1953. The Order allows for-

    • Issuance of Exporter and Distributor Licenses
    • Issuance of Certificate of Origin for teas designated as Geographical Indication
    • Issuance of Non-Preferential Certificate of Origin
    • Empanelment of Inspection Agencies
    • Provision for the suspension or cancellation of these licenses
    • Other regulatory provisions to be complied with by these licensees.
  • The Tea Waste (Control) Order, 1959

    • The Tea Waste (Control) Order, 1959 was issued in order to check the misuse of tea waste and regulate its disposal for gainful purposes. Tea Waste Licenses are issued after investigation and scrutiny to bonafide buyers and sellers of tea waste.
    • No person can purchase, hold, sell or offer for sale any tea waste except in accordance with the terms of the license granted by the Tea Board under this Order.
  • The Tea Warehouse (Licensing) Order, 1989

The Tea Warehouse (Licensing) Order, 1989 allows for the issuance of Tea Warehouse Licenses by the Licensing Branch.

Licenses Required

The Licensing Branch of the Tea Board of India is responsible for implementing various statutory and regulatory orders issued by the government. It also guides the tea industry with respect to different fiscal policies and legislation and issues several licenses.

  • Business License

No distributor or exported can conduct trade in tea without a business license granted under the Tea (Distribution and Export) Control Order, 2005.

    • Application

The exporter or distributor has to apply to the Licensing Authority through Form A.

      • A business license is valid for a period of three years from the date of its issue unless it is cancelled or suspended.
      • It may also be renewed for another period of three years.
      • A fee of Rs. 1000 is required to be paid for the issue of a business license.
    • Permanent License

A licensee wishing to convert their license into a permanent business license has to apply to the Licensing Authority through Form B three months before the expiry of their license.

A business license can be converted into a permanent business license on receipt of the application if-

      • the business licensee is an exporter;
      • such business licensee has not violated any provisions of the Tea Act, 1953 or Tea Rules, 1954 or Tea Board Bye-Laws, 1955 or any Order made under the Act; and
      • the volume of export of tea by the exporter holding the valid business license during the last three years was not less than 1,00,000 kgs annually.
    • Activities a business license is not required for

A business license is not required for tea exported-

      • By or on behalf of the Central Government or the Tea Board;
      • By means of a postal parcel;
      • As personal effects of passengers;
      • For any non-commercial purposes;
      • As samples to foreign buyers;
  • Exporter’s License

Any person who wishes to trade in tea as an exporter requires an Exporter’s License under the provisions of Tea (Distribution & Export) Control Order, 1957. The licensing fee to be paid for the issue of an Exporter’s License is Rs. 100/-. Under certain amendments made to the Order in 1993, 1995 and subsequently with effect from 2000-

    • An Exporter’s License, unless suspended or cancelled, is valid for 3 years from the date of issue.
    • Every licensee who is an exporter who wishes to convert his license to a Permanent License has to apply to the Licensing Authority through Form CA three months before the expiry of the license.

The License can be converted to a Permanent License if-

    • The licensee is a regular exporter and exports sizeable volume of tea in each year, and
    • Such Licensee has not violated any of the provisions of the Tea Act or Tea Rules, 1954 or any of the Tea (Distribution & Export) Control Order, 1957.

The Permanent License is granted under Form CB with no payment of a license fee.

  • Distribution License

Under the Tea (Distribution & Export) Control Order 2005, no distributor can distribute imported tea except under a valid Distributor’s License. The fee for its issuance is Rs. 2500/-.

  • Certificate of Origin

The Tea Board also grants Certificates of Origin for tea produced in specific areas of Darjeeling, Assam, the Nilgiris that has been designated as Geographical Indication and is proposed to be exported or distributed.

The Certificate of Origin is granted to those who wish to obtain one under clause 5A(2) of the Tea (Distribution & Export) Control Order, 1957.

The fees required for a Certificate of Origin is Rs. 100.

  • Tea Waste License

    • The granting and renewal of a Tea Waste license is made under the provisions of the Tea Waste (Control) Order, 1959. No person can purchase, hold, sell or offer for sale any tea waste except in accordance with the terms of the license granted.
    • The License is granted in order to regulate the disposal of tea waste for gainful purposes. It is issued after investigation and scrutiny to bonafide buyers and sellers.
    • It remains valid upto 31st December of the year of issue unless cancelled or suspended and can be renewed each year.
    • The fee for granting of a new license is Rs. 100/- and Rs. 50/- for renewal.
  • Registration-Cum-Membership Certificate (RCMC)

    • Every registered exporter of tea is required to be registered with the Tea Board to obtain a Registration-cum-Membership Certificate under the Export-Import Policy.
    • These were earlier issued free of charge. Now, however, a fee of Rs. 5000/- is levied on the issuance or renewal of the RCMC by the Tea Board.
  • Tea Warehouse License

The Tea Warehouse License is issued under the Tea Warehouse (Licensing) Order 1989 by the Licensing Branch.

    • An application can be made to the Licensing Authority through Form A with the payment of a fee of Rs. 1000/-.
    • A license issued is valid for a period of three years from the date of issue.
    • It may also be renewed for a period of one year on the payment of a fee of Rs. 200/-.

There are certain specifications that the warehouse must conform to for the issue of this license-

    • Shall be fit for tea storage;
    • The walls and the roof may preferably be made of bricks and well plastered, or be made of tins or asbestos, but in any case, the walls and roof must be damp-proof and leak-proof;
    • The floor shall be of pucca construction, properly-cemented and damp-proof ;
    • It shall be properly ventilated, but at the same time protected against pests, rodents, birds and insects ;
    • There shall be adequate lighting arrangements and electrical fittings should be maintained in good condition ;
    • There shall be adequate number of gates of appropriate size for easy ingress and egress of tea chests ;
    • The entry/exit gates shall have leak-proof covered sheds to protect against rain damage at the time of loading/unloading of tea chests ;
    • The doors and windows shall be properly secured for the safety of the stored goods ;
    • where the warehouse will store teas other than owned by the licensee, there shall be adequate space for parking /manoeuvring of the vehicles carrying teas. The approach road shall be properly maintained and shall have adequate number of fire-fighting equipments ;
    • The warehouse shall store only tea and other materials connected with the storage, blending and packaging of tea. Anything which may adversely affect the quality of tea shall not be kept in the warehouse ;
    • The hygienic condition of the surrounding area adjoining the warehouse shall be properly maintained;
    • No new construction shall be undertaken in an area prone to waterlogging. The existing warehouses shall take proper precaution against entry of water due to sudden heavy rainfall ;
    • The workers engaged in the manual blending of tea shall wear clean dresses and shall not have any contagious disease.
    • The warehouse must have an adequate number of supervisory, clerical staff and workers depending upon the nature of the business carried out therein and commensurate with the volume of business handled.
    • The Warehouse storing teas not belonging to the licensee shall have the following-
      • Adequate number of watch-and-ward staff ;
      • Adequate number of weighing scales proportionate to the volume of business which the warehouse is capable of handling. Such scales in operation shall be maintained properly to ensure correct reading of weights ;
      • Shall use dumping pads made out of appropriate materials to avoid damage of tea chests while dropping on the floor ;
      • Shall not stock too high which may cause damage to the chests and leave enough space between two rows of stacking for smooth movement of workers and easy identification of chest markings ;
      • There shall be adequate space for office, for receiving, delivery and sorting of teas, for the brokers to draw samples and for blending/packaging of tea, wherever such operations are applicable.

Registration

  • Ownership

The ownership or any change in ownership of a tea factory has to be registered with the Tea Board of India under the TMCO 2003.

  • Auction Organiser/Broker

    • Auction Organizer

The TMCO 2003 also stipulates the no organizer or tea auction can organize, hold or conduct a public tea auction except under a licence obtained from Tea Board. Such licence is renewed every year and this valid up to 31st December each year.

The fee for issuance of a new license is Rs. 2500/- and Rs. 500/- for renewal of license.

    • Broker

No person can broker any public tea auction except under a licence obtained from the Tea Board. Such licence is also valid up to 31st December of each year and is renewable each year.

The fee for issuance of a new license is Rs. 2500/- and Rs. 500/- for renewal of license.

  • Tea Manufacturing Unit

The TMCO 2003 stipulates that no manufacturing activities can be carried without registration or a license from the Tea Board.

A Tea Manufacturing Unit is registered with the submission of an application, along with the payment of a fee of Rs. 2500/-.

  • Manufacturers of Tea with Added Flavour

    • The sale of flavoured tea had earlier been banned in the domestic market and was only allowed following the Supreme Court’s decision in Nilgiris Tea Emporium vs. Union of India and Ors.
    • Consequently, the PFA Rules 1955 were amended by the government to allow the sale of flavoured tea by registered manufacturers in a packed condition with a declaration of the level.
    • The Licensing Branch of the Tea Board is responsible for granting this license.
  • Buyers

Under TCMO 2003, no buyer with a place of business in tea in India can buy tea from any public tea Auction licensed by the Tea Board or directly from the manufacturer of tea except under a valid registration obtained from Tea Board. The registration Certificate once granted by the Tea Board remains valid unless cancelled.

  • Plantation Labour Act, 1951

Within 60 days of commencement, registration is also required for a tea plantation under the Plantation Labour Act, 1951 to the Labour Bureau under the State government.

Permits Required

  • Permission for Planting Tea

A permission for the planting of tea is issued to newcomers by the Licensing Branch, along with the recording of any change in ownership of the tea estate.

  • Permit for Extension and Replacement Planting

Permits for Extension and Replacement planting of te are issued by the Licensing Branch to existing tea estates under the Tea Act, 1953 and the Tea Rules.

Environmental Clearances

Under the categorisation of industries issued by the Environment Ministry-

  • Instant tea has been categorised as an ‘Orange Industry’.
  • Tea processing has been categorised as a ‘Green Industry’.
  • Tea blending and packaging have been categorised as a ‘White Industry’.

While White Industries are not required to seek any environmental clearances, Orange and Green Industries are required to get cleared by the Environment Ministry.

Thus, any tea processing unit and manufacturer of instant tea will further have to seek environmental clearances.

FSSAI Guidelines

The Food Safety and Standards Authority of India (FSSAI) has issued exhaustive guidelines about the sale of flavoured and Kangra tea, the labelling for tea products, the composition of tea and the testing and approval of products.

  • The product shall have the characteristic flavour free from any off-odour, mustiness, and taint. It must not include living insects, dead insects, molds, insect fragments and rodent contamination that is visible to the naked eye. The product shall be free from added colouring, harmful substances, and extraneous matter.
  • The tea may contain natural flavours and natural flavouring substances, which are flavour preparations and acceptable for human consumption only if it is obtained by physical processes from the plant origin, either in their natural state or after processing for human consumption in packaged tea only.
  • Tea used in the manufacturing of the flavoured tea shall conform to the standards of tea. Also, the tea containing added flavour needs to bear a proper label declaration as provided in the regulation. If the tea manufacturer is providing flavoured tea, then they must register with the Tea Board before marketing flavoured tea.
  • The tea manufacturers must make sure that the tea is packed and labelled in accordance with FSSAI regulations, whose labelling requirements are extremely stringent. If the requirements are not fulfilled, the manufacturer will be liable for penalties mentioned under the FSS (Packaging and Labelling) regulation, 2011.
  • The label must bear all the relevant and important information before it is ready for sale in the market in a clear, prominent and easily readable format for the consumers. The package must carry a label with the information mentioned below:
    • Common Name of the Product
    • Name and address of the manufacturer
    • Date of manufacturing
    • Expiration Date and Best Before Date
    • Net Weight of the content by volume, weight or count
    • Ingredients details with additives
    • Packaging Codes/ Batch Number
    • Country of origin for imported food

A detailed list of the provisions can be found here.

Subsidies By The Tea Board

The Tea Board of India also offers various subsidies to planters of tea for plantation development, quality upgradation and product diversification, market promotion, research and development, welfare of tea garden work force, small growers development and programme for tea regulation for overall protection, growth and sustenance of the Indian teas. Further details about these subsidies can be accessed here.

It also offers loans and other subsidies to planters under the Special Purpose Tea Fund Scheme.

There are, thus, a number of legal rules that a person will have to comply with in order to set up a tea garden.

References

  1. http://www.teaboard.gov.in/pdf/annual_report/Chapter%207.pdf
  2. http://www.teaboard.gov.in/pdf/Tea_Board_Annual_Report_2015_16_pdf3913.pdf
  3. http://old.fssai.gov.in/Portals/0/Final_Regulations_2010.pdf
  4. https://enterslice.com/learning/fssai-guidelines-tea/
  5. https://www.vakilno1.com/bareacts/tea1953/tea.html
  6. http://www.teaboard.gov.in/pdf/policy/Tea_Distribution_Export_Control_Order_2005.pdf

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