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India’s Tea Industry

By Amigos IAS

Why is it in the news?

  • India’s tea industry faces challenges reminiscent of the “dark phase” of 2002-07, prompting a need for introspection and resilience among stakeholders.

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Challenges Faced by Indian Tea Industry

  • Over the past decade, tea prices in India have shown a Compound Annual Growth Rate (CAGR) of around 4%. Contrastingly, the costs of critical inputs like gas and coal have surged at a CAGR ranging between 9-15%.
  • The rise in small tea growers and subsequent increase in production has resulted in a surplus. However, this surplus is not in harmony with domestic consumption and exports, creating a demand-supply gap.
  • Nearly 20% of India’s tea exports go to the Iran market, but a decline in exports due to payment issues is causing financial stress to exporters.
  • Overall, a decline in global demand for tea has led to an international price crash, affecting the Indian tea industry.
  • Unrestricted entry of substandard tea, especially from neighbouring countries like Nepal, poses a threat to the quality and competitiveness of Indian tea.
  • Other factors include stagnant prices, concentration of market power among key players, and a compromising quality to make tea more affordable are identified as significant challenges.

 

About Tea Board of India

·       The Tea Board of India, operating as a statutory body under the Ministry of Commerce, was established in 1953 with the aim of promoting tea cultivation, processing, and trade.

·       Its headquarters are located in Kolkata, West Bengal.

 

Steps Taken by Indian Government

  • Schemes such as the “Assistance of Education Stipend to the Wards of Small Tea Growers” to improve livelihoods and education needs.
  • Facilitating the formation of Self-Help Groups (SHGs), Farmer Producer Organizations (FPOs), and Farmer Producer Companies (FPCs).
  • Developing a mobile app, “Chai Sahyog,” to assist small tea growers in achieving better price realization and accessing information.

 

Way Forward

To revitalize the tea industry, the government needs to intervene with strategic measures such as:

  • Better export infrastructure.
  • Full defraying of state duties by increasing the RoDTEP (Remission of Duties or Taxes on Export Products) rate.
  • Reducing interest rates on borrowings to enhance the competitiveness of Indian tea in the international market.
  • Implementing measures to regulate tea waste, restricting the import of poor-quality teas, and emphasizing the health benefits of tea.

 

About Indian Tea Industry

·       India is the second-largest tea producer globally and the largest producer of black tea.

·       The industry exports to various destinations, ranking as the fourth-largest tea exporter globally.

·       Employment is substantial, with 1.16 million workers directly engaged and an equal number indirectly associated.

·       Assam contributes significantly, accounting for 55% of the total tea produced in India.

·       Notably, Indian tea production has increased by 39% in 2022 compared to 2008.

 

Geographical Conditions for Tea Production

·       Tea plants thrive in tropical and subtropical climates, requiring warm, moist, and frost-free conditions throughout the year.

·       Ideal soil conditions include deep, fertile, well-drained soil rich in humus and organic matter.

·       The average annual temperature range for tea plants is 15-23°C.

·       Adequate precipitation, around 150-200 cm, is necessary, with well-distributed rainfall throughout the year.

·       Major tea-producing states include Assam, Darjeeling, Jalpaiguri districts in West Bengal, Tamil Nadu, and Kerala. Additionally, Himachal Pradesh, Uttarakhand, Meghalaya, Andhra Pradesh, and Tripura contribute to tea production.

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