Indian tea holds a superior position globally due to its taste and flavour. Suitable climate and geographical factors, decent investments, innovations in processing and strategic market expansion have helped the industry to flourish. Tea is mostly grown in West Bengal, the north-eastern states, and the Nilgiri Hills in southern India. Apart from CTC (crush-turn-curl), green and organic tea, the country is also focusing on the flavoured tea market due to increasing demand. Along with other Asian countries, India also holds a good position in the domestic consumption of tea. The country stands fourth in tea exports after Kenya, China and Sri Lanka.
In 2016, India was the second largest tea producer in the world, producing 1,267 million kilogrammes (kg) of tea. According to figures published by the Tea Board of India (TBI), India’s estimated tea production in January, 2018, stood at 17.15 million kg. It was down by 10.49% from the 19.16 million kg produced in January, 2017. But another piece of published data by the same organisation also shows that the Indian tea industry recorded the highest ever productionin FY 2017-18 by generating 1325.05 million kg of tea. It has seen an increase of 74.56 million kg as compared to FY 2016-17, which led to an increase of around 6% in overall tea production. The production rate of the industry has been appreciable over the years. However, according to industry sources, the production may drop this year due to poor weather conditions in some of the important tea growing regions.
Export rate and destinations
Total tea exports of India stood at $837.33 million (Rs. 4,731.66 crore) in FY 2017-18 as compared to $731.25 million in the previous fiscal. During April-October 2018, tea exports reached $463.95 million and India recorded the highest tea exports in 36 years with a year-on-year increase of 8.2%.
The TBI said that in value terms, the export amount stood at $610.2 million (Rs. 970.37 crore) in the past ten months of the current fiscal year (FY 2018-19). But according to provisional data by the TBI, tea exports slightly dropped to 22.27 million kg in January, 2019, from 23.85 million kg in January, 2018.
According to the ‘Tea Export Report of India’ published by Export Genius, the major importing countries of Indian tea are Russia, USA, Germany, the Commonwealth of Independent States (CIS), Iran, UAE, UK, Pakistan, Egypt, China and the Netherlands.
In the last fiscal, India earned an average of $2.70 per kg for its CTC exports. But exports from India to CIS countries dropped to 4.96 million kg in January 2019 as compared to 6.06 million kg in January 2018. Exports to the UAE during January 2019 also decreased to 1.51 million kg from 3.19 million kg in January 2018. Between April-October 2018, major importers of Indian tea were Russia ($ 64.14 million), Iran ($ 57.63 million), the US ($ 34.90 million), the UK ($ 34.31 million) and the UAE ($ 30.15 million). In value terms, exports fell to $ 62.8 million (Rs. 408.74 crore) from $ 63.4 million (Rs. 412.35) crore in January 2017. Exports to Russia, Ukraine, Kazakhstan and Germany have also seen a drop for the same.
Causes behind export drop
The rate of domestic consumption in India is growing at a rate which is double the world’s average rate of tea consumption. The high rate of domestic consumption coupled with a lull in the production cycle have led to a drop in export. Additionally, India’s tea bushes are old; 40% of the total tea planted was in the 1960s. India is struggling to increase profit per hectare because of poor and old plants. Rising labour costs are now around 50% of the total cost of production.
Increase in tea exports from Kenya can be considered a major reason for a fall in tea exports from India. Kenya is poised to have a good production rate this year, increasing the risk of oversupply, which will raise its exports. Additionally, Kenya offers better prices compared to the Indian tea market. In this situation, after the withdrawal of the most favoured nation (MFN) status to Pakistan by India, tea exporters and producers are working harder to capture the