Explained: Why the govt plans to scrap the decades-old Coffee Act

Source: The post is based on the article “Explained: Why the govt plans to scrap the decades-old Coffee Act” published in Indian Express on 29th July 2022.

What is the News?

The Ministry of Commerce and Industry is planning to replace the Coffee Act, 1942 with the new Coffee (Promotion and Development Bill), 2022.

Note: Karnataka is the biggest producer of coffee in India.

What is the Coffee Board Act,1942?

The Coffee Act, 1942 was first introduced during World War II in order to protect the struggling Indian coffee industry from the economic downturn caused by the war.

The Act empowered the Coffee Board to control the production, marketing and sale of coffee in the domestic as well as international market. 

The act introduced a pooling system where each planter was required to distribute their entire crop to a surplus pool managed by the Board, apart from the small quantities that were allowed for domestic use and seed production.

What were the earlier amendments made to the Act?

Through a series of amendments, the Coffee Board’s authority was reduced and in 1996, the pooling system was abolished and coffee growers were allowed to directly sell to processing firms. 

Since liberalization, the Coffee Board plays more of an advisory role and aims at increasing production, promoting further export and supporting the development of the domestic market.

What is the purpose of the Coffee (Promotion and Development Bill), 2022?

The Bill seeks to replace the Coffee Act, 1942 as many of its provisions have become redundant and are impediments to the coffee trade.

Key Provisions of the Bill

The Bill is now primarily concerned with promoting the sale and consumption of Indian coffee, including through e-commerce platforms, with fewer government restrictions. 

It promotes ease of doing business by simplifying documentation and procedures, including replacing the existing five-year validity of Registration cum Membership Certificate (RCMC) with a one-time exporter registration.

The Bill also brings in a one-time registration of curing units. (Curing is a process that prepares coffee beans for the market).

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