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PRE BUDGET REPORTS

Coffee: Cut import duty to 5% on coffee equipments

Coffee is considered as a tradition in some countries, in India, only the Southern region is known for coffee consumption. The stimulant beverage coffee comes from the evergreen bush of genus Coffea, which belongs to the Rubiaceae. Coffee plant grows up to 3-3.5 Metre (10-12 ft) in height. Tropics are best suited for the coffee plant and it is grown only in the hill tops, for higher the altitude better is the taste of coffee bean, though longer it takes to ripe. Normally the coffee plant can grow in the altitude between less than 600 Metre and above 1600 Metre. They are grown in the altitude ranging from about 500 Metre to 1500 Metre in India.

There are two basic varieties of coffee plants namely, Arabica and Robusta. Beans from the Arabica plants are milder than that of the beans from the Robusta plants in terms of caffeine content. The altitude also differs (the Robusta is grown between 500 to 1000 Metre and the Arabica is grown between 1000 to 1500 Metre). Both the varieties are produced in India, but the proportion of Robusta is higher than that of the Arabica.

India occupies the sixth place in the coffee production and also exports, both contributing to about 4% each to the world coffee production and exports. Brazil, Vietnam, Colombia, Indonesia and Ethiopia occupy the first five places in the production of coffee. India exports about 75% of the total production and the remaining about 25% is consumed internally.

Budget Wish-list

Machineries such as Automatic & semi-automatic fresh brew coffee vending/ dispensing machines including coffee express machines for industrial use, Coffee grinders (domestic appliance), Coffee roasters (domestic appliance), Coffee makers (including espresso machines) (domestic appliance), Mechanical Driers and Coffee huller machines should be considered for a concessional rate of import duty at 5% from the current 7.5%.

Tata coffee and CCL products

Outlook

The year of 2010-2011 had been better for the coffee sector as the production of coffee improved by 4.28% to 302000 MT. The production of Arabica came down slightly by 0.48% over the corresponding period to 94140 MT whereas Robusta increased by 6.5% over the corresponding previous period and has been constantly increasing in the past couple of years. The production of Robusta had stood at 207860 MT. In 2011-12. Coffee production again increased by 7% to 322250 MT with healthy 11% increase in Arabica production and 5% Robusta production.

Export of Coffee from India saw a 16% dip in the year 2011-12 (from 01 April 2011- 31 December 2011) to 247773 MT.

The International Coffee Organization (ICO) has revised its global coffee production estimate for the current coffee year to 128.6 million bags, which is 1.2 million bags. Production of Arabica and Robusta coffee beans in the 2011-12-crop year is forecast to be at 79.6 million bags and 48.9 million bags, respectively.

The industry is expecting scrapping of an import duty on coffee equipment like vending machines, blenders, harvesters and other plantation machineries and if this is implemented it will enable easier availability of the equipment and is expected to give a lift to the coffee industry, which is struggling with labour shortage and high input cost. The move is likely to benefit coffee industry at a time when it has reported dip in exports.