04

The tea industry in India has revived to a large extent after the Covid-19 shock. But in spite of various efforts, the projected amount of production of tea as well as its export
will not be achievable this year according to Raj Bansal, President, Tea Association of India.

Bansal said this during his speech at the 48th Biennial
General Meeting of the Tea Association in Kolkata. It is true that production of tea in India has revived to a large extent. The tea production in India has increased by 97.52 million kg (Mkg) during last January to September period compared to that in 2020. It can be considered as a commendable performance of the industry. This is because the total
global black tea production has increased by 94.45 Mkg during the January to September period compared to that of 2020. India mostly produces black tea.

Target of tea production and export

Projection of tea production by the tea industry during 2021 has been 1360 Mkgs. It had been 1257 Mkgs in 2020 and 1390 Mkgs in 2019. That means tea production in India is yet to reach the pre-Covid level. At the same time, projected export of tea of India for 2021 is 200Mkgs. The export volume was 209 Mkgs in 2020 but in the pre Covid year (2019), the export of tea had been 252 Mkgs. Bansal pointed out that the Tea Board of India had convened a meeting on the export
scenario on August 6, 2021. There it was decided to make a targeted national effort to achieve tea export of 300 Mkgs for the FY 21-22 fiscal. But Bansal thinks that in the present scenario, to achieve the export target of even 250 Mkgs, appears to be bleak.

Pricing of tea

The common notion is that for pricing of any commodity, the quantity of demand and supply of a product plays a vital
role. Pricing of tea is no exception. The bigger tea producers, that is, the tea estate owners are always talking about the increasing supply of low-quality tea to be a dampener for the entire tea industry in India. The small tea gardens are generally targeted in this regard. So the price of tea is not desirable in India as there is always a huge supply of low quality tea in the market. This depresses the prices of tea as a whole.

For better pricing, the tea auction system should be robust. The auction system has already been extended. But Prabhat Bezboruah, Chairman, Tea Board of India and Chairman, Tea Research Association told BE that tea pricing and selling in India were practically not happening in the competitive market. It was not fully possible even in the auction market. This was because, in many cases, a small group of buyers of tea controlled the tea market. Practically, in the tea sector, a monopolistic system was working. That meant a few buyers controlled the pricing and a large number of sellers had to accept their prices in the Indian tea market. Therefore, the profitability of quality tea had not been at all encouraging. The cost had been going up but the price was not remunerative. Tea industry had been suffering.

Ban of low-quality tea from Nepal and Kenya

It is known that Indian tea is famous for its quality. A small section of high quality tea is sold around the world at very high prices. But during the last few years, cheap and low-quality tea from different countries has been imported in
India and these are mixed with Indian tea and the mixed
items are being exported to other countries as Indian tea. As a result, a section of dishonest traders has been earning good profits by using India’s fame. It is reported that in this FY, from January to August, tea imports have increased by
34% compared to that of the same period of 2020. At the same time, the unit price of imported goods has been
lower. It is notable that import from Nepal has increased by 28% and surprisingly that from Kenya by 134%.

But recently, the Tea Board of India has taken the matter seriously. Some steps have been taken by the Tea Board.
First, importers of tea have to inform the nearest Tea Board office about their import within 24 hours of import.
Secondly, the Tea Board will collect samples from the imported tea and analyse those samples to get information.
Thirdly, Board officials will give surprise visits to the tea warehouses if necessary.

It is true that the tea industry in India is not in a very good shape. But one advantage of the industry has been that about 80% of the Indian tea market is domestic. So the dependence of foreign market for Indian tea is not very high. At the same time, the foreign market must be extended to earn good profit. This requires production of more and more quality tea and establishing the brand of Indian tea in foreign countries.