Syllabus: GS3/ Economy
Context
- Tea industry in India is a Rs 15 billion industry & India remains the world’s second largest producer and consumer of tea which are facing rising competition from cheaper alternatives.
Why the Squeeze Is Happening?
- Farm gate prices have simply not kept pace: Over the last decade, the cost of essential inputs, labour, fertiliser, energy, has climbed 9 to 15%, while tea prices have inched up by barely 4%.
- Role of alternatives into premium markets: Nepal’s low cost tea has drifted the darjeeling’s Tea demand, also low wages, around Rs 250 a day in Assam, are pushing the next generation away from plantation work altogether.
- Regulation has added costs, even if for good reason: The ban on 20 pesticides, necessary to meet residue limits and protect India’s export credibility, has pushed producers toward costlier alternatives, squeezing already thin margins.
- Consumer habits are shifting: Younger, health conscious, urban Indians are increasingly drawn to coffee, ready to drink teas, energy drinks, and herbal infusions.
- Supply still outpaces demand: Oversupply against low consumption keeps prices under pressure.
Way Ahead
- Enforcing stricter auction based procurement so growers get fairer prices.
- Investing in replantation, since ageing tea bushes are quietly dragging down productivity.
- Encouraging diversification into instant tea, wellness drinks, and new formats to meet changing consumer tastes head on.
- Moving quickly to capture the market Sri Lanka is losing, backed by strong quality and compliance standards.
- Extending targeted support to small growers, similar to agricultural sector schemes, so that estate closures do not become the norm.
India’s Tea Industry: Key Facts
- Tea was introduced commercially in India by the British in Assam in the 1830s.
- Darjeeling Tea was the first product in India to receive a Geographical Indication (GI) tag in 2004–05.
- The Tea Board of India, headquartered in Kolkata, functions under the Ministry of Commerce and Industry and is reconstituted every three years. It handles licensing, export promotion, research funding, and welfare schemes.
- India ranks as the world’s second largest producer and consumer of tea, and its third largest exporter, behind Kenya (which exports nearly all it produces) and China.
- Assam, West Bengal (Dooars, Terai, Darjeeling), Tamil Nadu, and Kerala together account for about 96% of national production, with Assam alone contributing over half.
- About 80% of domestic production is consumed at home. India exports to more than 25 countries, with Russia, Iran, UAE, USA, UK, and Germany among the largest buyers.
Source: TH
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