It’s Time For Chai Now

By Samiuddin Khan

Will India’s push to implement e-auction for tea work in an industry so steeped in tradition?

It's been tried twice before, unsuccessfully. This time, with the weight of the Central Government behind it, there is a real possibility that the concept of an e-­auction of tea can actually taste success. Last month, Minister of State for Commerce and Power Jairam Ramesh formally launched e-auction at the Tea Trade Centre in Kochi, saying that he hoped that in little over a year’s time, the country would have switched over completely to the electronic format.

Ramesh was following up on the success of the applying the concept of e-auction to coal. Traditionally syndicated by a coterie, the introduction of the electronic format broke the stranglehold of the coal mafia and brought in gain for both producers and consumers.

Despite the success in coal, tea is, well — another cup of tea. And the e-auction concept has already been ­attempted not once, but twice. Both attempts failed. A decade ago, the concept was first attempted by a progressive group of tech-savvy youngsters. The idea was to use it as a rival to the existing auction system. No one quite ­understood the reasons at the time — it was part rebellion, part trying to prove that technology could beat an established and entrenched form of auction process that had been around for 120 years. It met with a bit of success, as the tea proprietors had a shot at modernising the traditional ­system — and then lost steam.

Then, there were murmurs of its revival, in the form of offshore auctions. Whilst the tea was still at sea, the e-auction would enable the buyers from designated ports (mostly ­located in the UK) in the process of picking and choosing a product and price — reducing the time between purchase and arrival of the tea in port.

The timing seemed right, and a great future was ­predicted, as the London Tea Auction Centre and the ­century- old entrenched Tea Brokers had all collapsed. But this attempt too failed.

This time around, Ramesh said at the Kochi launch that it was the fifth centre to implement the concept, after Guwahat, Kolkata, Siliguri and Jalpaiguri. Coimbatore and Conoor are to follow.

A new web-based system developed by NSE IT will ensure the buyer’s anonymity and enable brokers to access the ­auction from any location. By January 31, 2009, a settlement system will be in place and there will not be any physical auction of tea after that, he added.

The moot point, however, is what does the electronic ­format replace? The concept of a tea auction is already based on transparency and equality of buyers, a process that has evolved over 130 years.

The new attempt at brewing a new marketing mantra will only work if there is full cooperation from the existing tea broking/tea trading global fraternity, to utilise both its breadth and depth of experience. I actually doubt that would happen.

However, the concept itself is sound, despite the hiccups in the first two attempts. The first e-auction endeavour, with Accenture replicating the existing auction system, failed. The next attempt with IBM, too, met with scant response.

It’s not certain how well the latest brew, with Rs 18 crore from the ministry and Tea Board, will be successfully infused by the NSE IT. In fact, no one has been able to tell me what they actually intend to do.

Will the e-auction idea be third time lucky? Considering its more official status, and the backing of the government, it could well be the cup that cheers.