Context

The Indian tea industry is under severe financial stress, affecting both investors and plantation workers, many of whom have been dependent on the sector for generations.

Overview of the Indian Tea Industry

• India is the second-largest tea producer globally and the largest producer of black tea.
• It is also the fourth-largest tea exporter, with key markets including Iran, Iraq, Syria, Saudi Arabia, and Russia.
• The industry provides direct employment to around 1.16 million workers and indirectly supports an equal number.
• Assam accounts for 55% of India’s total tea production.
• Between 2008 and 2022, India's tea output rose by 39%.

Challenges Facing the Tea Industry

Rising Costs & Economic Pressures

• Input Costs: Prices of coal and gas have risen at 9–15% CAGR, while tea prices have increased only by 4% CAGR.
• Wages, fuel, and fertilizers continue to drive up production costs, squeezing margins.

Demand-Supply Imbalance

• Increase in production, especially by small tea growers, has outpaced domestic consumption and exports, leading to surplus stock.

Export Dependency & Decline

• Exports to Iran, a major buyer (20% share), have dropped due to payment challenges.
• Global oversupply has triggered a price crash in international markets, weakening export prospects.

Import of Substandard Tea

• Unregulated influx of low-quality teas from Nepal is hurting Indian producers by diluting brand quality and suppressing prices.

 Sustainability Concerns

• Increasing demands for eco-friendly practices: soil conservation, reduced pesticide use, and water efficiency.
• Environmental degradation is also impacting the long-term viability of plantations.

Structural Issues

• Stagnant domestic prices
• Market concentration in the hands of few players
• Efforts to make tea more affordable are sometimes compromising quality

Tea Board of India

• Statutory body under the Ministry of Commerce, established by the Tea Act, 1953.
• Headquarters: Kolkata, West Bengal
• Responsibilities include promotion of cultivation, processing, trade, and export of tea from India.

Government Initiatives

• Education Stipend Scheme: Financial support to children of small tea growers.
• Support for formation of:
  • 352 Self-Help Groups (SHGs)
  • 440 Farmer Producer Organisations (FPOs)
  • 17 Farmer Producer Companies (FPCs)
• Chai Sahyog App: Under development to assist small tea growers with real-time price updates and advisory services.

Way Forward

• Enhance export infrastructure and revise RoDTEP (Remission of Duties and Taxes on Export Products) rates to refund all taxes and levies.
• Lower interest rates on working capital and term loans to reduce financial stress.
• Regulate the sale of tea waste in domestic markets and restrict import of poor-quality teas.
• Promote the health benefits of tea to create stronger domestic and international demand.

Geographical Conditions for Tea Cultivation

??Major Tea-Growing States

• Assam
• West Bengal (Darjeeling, Jalpaiguri)
• Tamil Nadu
• Kerala

Other Contributors

• Himachal Pradesh, Uttarakhand, Meghalaya, Andhra Pradesh, Tripura

Conclusion

India’s tea industry, a vital part of the rural economy, is facing structural, economic, and ecological challenges. A multi-pronged strategy—emphasizing export competitiveness, quality assurance, sustainability, and market diversification—is essential to ensure its long-term revival and growth.