Unethical practices and inflated claims put into question the future of schemes for investment in teak plantations in India.
Investment in tree plantations, which was always relatively low in India, has recently grown in importance. Forest-based industries, recognizing that the existing forests cannot continue to meet their raw material requirements, are expected to play a significant part in increasing investments in plantation programmes in the coming years. Private investment in teak plantations has arisen as a response to the growing demand for housing- and furniture-grade timbers, of which teak is the most valued. India is one of the largest producers of teak in the world, but the supply does not meet national demand.
Since 1991, plantation companies in India have been promoting schemes offering investors teak trees at a nominal cost with an expectation of spectacular returns after as little as 20 years. Such tree plantations could certainly contribute to the supply of timber and other tree products and could help to increase tree cover in the country. However, some unscrupulous companies, inadequately regulated, have exploited investors by promising impossible returns, closing their companies or failing to plant trees at all. Many of the claims made by promoters of teak investment programmes are inconsistent with the silvicultural and economic research on teak. These unethical practices and inflated claims put into question the future of teak investment programmes in India.
Since some plantation companies have created scepticism, the future of teak investment programmes in India is not clear. The conflicting projections on teak growth have had serious repercussions for private companies involved in teak plantation, which is after all an enterprise still in its infancy. There is certainly a paucity of reliable literature on the functioning of the private plantation companies in India.
The Government of India is trying to verify the viability of teak plantation companies on both financial and technical grounds. The Forest Research Institute of India has already undertaken an action in this direction by joining hands with some of the plantation companies to undertake research work (J.K. Rawat, personal communication, 1999). Moreover, the Government of India has already brought the plantation companies under the ambit of the Securities and Exchange Board of India. This giant step will aid in monitoring, regulating and controlling the plantation companies to satisfy investors. Efforts should also be made to collect information on defaulting plantation companies, to help distinguish worthy companies from those likely to fail.