Bengaluru, April 6 (IANS): Coffee and tea planters in southern India on Monday opposed the reduced incentives for bulk exports in the new foreign trade policy that came into effect from April 1.

"Reduction of two percent from five percent on rates of rewards in the Vishesh Krishi Gram Udyog Yojana to three percent under the new Merchandise Exports from India Scheme (MEIS) makes exports unviable," United Planters' Association of South India (Upasi) president Vijayan Rajes said in a statement here.

In the new policy, unveiled by Union Commerce and Industry Minister Nirmala Sitharaman on April 2 in New Delhi, the new scheme (MEIS) for export of specified goods to specified markets, has categorised countries into three groups whereas rates of rewards range from 2-5 percent.

"The reduction in the rates of rewards will hit planters, especially exporters, as they are reeling under pressure of un-remunerative prices and rising production cost," Rajes, a seasoned coffee and tea grower in Tamil Nadu, asserted.

Duty credit scrips issued under MEIS and goods imported against them are, however, fully transferable.

Though the new policy for the next five years (2015-2020) has simplified procedures for exports, the new scheme does not benefit planters, as they export tea or coffee in bulk form.

"Changing over to value addition or packaged form is not feasible as the demand is for bulk commodities. Some countries discourage import of value added products by levy of additional tariffs," Rajes said.

Prices of Arabicas' and Robusta' beans declined to 160.74 and 92.16 US cents per pound from 223.48 and 100.5 cents respectively in March in the International Coffee Organisation (ICO) auction.

"The scenario is no different in tea as the south Indian average price of Rs.92.25 per kg during the first quarter of 2014 has dropped to Rs.83.58 per kg in the same quarter of 2015," Rajes noted.

The association will approach the commerce ministry to rectify the injustice to bulk coffee and tea exporters.

The association is also cut-up with the government, as the budget for this fiscal (2015-16) has not increased import tariff on natural rubber to 25 percent from 20 percent for protecting its growers, reeling under lower prices due to unrestricted imports.