Context

'Three hundred years ago, during the Age of Enlightenment, the coffee house became the centre of innovation.' - Peter Diamandis.

As India has urbanised, the number of coffee houses have proliferated, and the cultivation of coffee has grown by 1667.8% from 1950-51 to date.

For instance, in 2020/21, India produced a total of 3,34,000 metric tonnes of coffee beans. It had exported coffee valued at Rs. 6,044.66 Crores – 75% of the total coffee cultivated internally – making it the 6th largest exporter in the world.

Yet the regulations for the coffee market in India are still from the era of the British Raj. In 1942, at the height of World War II, when global markets were extremely volatile for various commodities such as sugar, rubber, grains etc., the colonial government introduced The Coffee Act. Through this Act, the Coffee Board ('Board') was set up and given complete control over the entire value chain, starting from cultivation till export.

In the post-liberalisation era, the Board continues to possess a wide variety of regulatory powers on paper to control the market as opposed to promoting and developing the burgeoning coffee sector in India. The law is out of tune with the reality of the Board's functioning and the needs of the coffee industry.

To address this, Vidhi worked closely with the Ministry of Commerce and Industry to prepare a draft law – the 'Coffee (Promotion & Development) Bill, 2022 ('Bill')'.

Developing the coffee sector

Drawing on key concepts from the International Coffee Agreement, 2007, the Bill has introduced specific suggestions on how the Coffee Board can accelerate the development of the coffee sector in India.

For instance, in Ghana, digital and remote-sensing technology has been transferred to farmers to enable them to create farm development plans based on environmental conditions and production levels. In India, a similar process could empower small scale coffee growers, who are responsible for approximately 80% of the coffee cultivation, to produce more efficiently by planning ahead.

Further, on the lines of the role played by the Brazilian government in leading research and awareness efforts on eliminating pests that harm coffee production, making Brazil the largest coffee producer in the world, the Bill mandates a similar role for the Coffee Board in India.

Promoting ease of doing business
in the coffee sector

One of the goals of the proposed Bill is to abolish the colonial vestiges of the License Raj system. It proposes that coffee growers will no longer be required to register with the Board while curers of coffee will have to register only once. Further, coffee exporters can voluntarily apply for International Coffee Organisation (ICO) Certificates of Origin, only if the export destinations require it.

The Bill also decriminalises the coffee sector by converting criminal fines levied for offences (such as failure to obtain a licence) to civil penalties.

These measures will reduce the regulatory burden on the coffee players significantly.

Impact

By decriminalising the coffee industry and dismantling the licence raj system of colonial India, the proposed Bill will help in the evolution and growth of the coffee sector in India.

Through the introduction of internationally recognised provisions and best practices as well as a clear understanding of ground level realities, the Bill transforms the Board from its current role of being in 'control' of the coffee sector to becoming the chief promoter and developer of Indian coffee.

If enacted into law, this Bill, with its progressive provisions in its current form, will become the standard for future regulatory statutes and is likely to make India among the 3 coffee exporting nations in the world.