Orthodox tea output seen up 47.4 pct by 2012

MUMBAI (Reuters) - India's orthodox tea output may rise 47.4 percent by 2012 on good export demand and incentives by the state-run Tea Board, a top official said on Wednesday.

Production is expected to increase to 140 million kg from 95 million kg last year, Basudeb Banerjee, chairman, Tea Board, told Reuters in an interview.

"We are positively encouraging the production of orthodox tea. We have schemes which provide up to 40 percent subsidy for installing machinery for orthodox production," he said.

Orthodox tea, which constitutes about 10 percent of the country's total tea output, is made from the top two leaves of each plant and manufactured with the help of an orthodox roller.

The Tea Board is also taking up quality upgradation and product diversification schemes to convert more CTC (curled-torn-crushed) plantations to orthodox variety.

Besides providing subsidies to growers, the Board spends about 200 million rupees a year to encourage production of orthodox tea, Banerjee said.

The Tea Board provides a subsidy of 3 rupees for every kg of orthodox tea produced, he said.

Orthodox tea is of a higher quality than CTC and is mostly exported.

EXPORTS TO RISE

Orthodox tea exports are likely to rise in the next few years due to higher demand from Russia and other European countries and stagnant production in Sri Lanka, a major exporter.

"I see excellent prospects in next few years. Sri Lanka's production is stabilising...opportunities are there for India and we can get greater share in the export market," Banerjee said.

Sri Lanka's tea production fell 2 percent in 2007 to 304.6 million kg due to insufficient use of fertiliser.

Russia is now shifting towards orthodox from CTC and India is trying to increase its exports to the country to regain its lost share. Currently, Russia imports about 20 percent of its orthodox requirement from India.

"We are looking at 130 million kg of orthodox tea export by 2012," Banerjee said.

In 2007, orthodox tea exports are estimated at about 93 million kg.