Abstract

The functioning of the tea industry forms the main source of revenue for Sri Lanka’s budget, which is now ranked as the world’s fourth largest tea producer and second largest exporter. About 20% of the world’s tea products are sourced from Sri Lanka. The key objective of this study is to analyze the financial and economic aspects in the context of studying the peculiarities of sales of tea production enterprises. The research of this question in the article is carried out in the following logical sequence: the specifics of the process of making tea products are studied; the historical aspects of the formation and development of the tea industry in Sri Lanka; identified the main directions of state policy in terms of functioning of tea production enterprises; Key aspects of the pricing and marketing policy of the tea industry have been analyzed; features of implementation of export mechanisms are indicated. The article focuses on the system of taxation by the government of the tea industry, taxes in the context of which are designed to redistribute gross domestic revenue in accordance with priority directions of state social policy. The paper notes that the Government of Sri Lanka has now implemented subsidy mechanisms for tea companies: 1) subsidy for the modernization of production facilities in the long run; 2) subsidy for the development of the tea industry to improve the efficiency of tea processing and its transformation into other varieties; 3) short-term subsidy, which insures against falling tea prices or rising raw material costs; 4) marketing subsidies in the form of tea promotion grants, discounts on import duties and grants from the Export Development Board. The study made it possible for the authors to summarize the following: in 2019, there is a gradual fragmentation of land and a shortage of skilled labor in the Sri Lankan tea industry; state policy to support the tea sector will in the long run allow for appropriate reforms and mechanisms for regulating aspects of the tea industry (adjusting exports and imports, pricing systems, subsidy programs, state land redistribution programs).

Keywords: government policy, pricing, sales mechanisms, exports, income and losses, tea industry.

JEL Classification: G3, G39.

Cite as: Jayasundera, M. (2019). Economic development of Ceylon Tea Industry in Sri Lanka. Financial Markets, Institutions and Risks, 3(3), 131-135. http://doi.org/10.21272/fmir.3(3).131-135.2019.

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