May , 2024
Is the Indian Tea Industry at a crossroads?
15:48 pm

Kishore Kumar Biswas

The Indian tea industry marks a significant milestone this year as it celebrates two centuries of journey since its inception. Originating in Assam, India, the tea plantation industry has reached its bicentennial milestone. Assam alone contributes over 52% of India’s tea production, amounting to approximately 630 to 700 million kilograms (mkg). India ranks as the world's second-largest tea producer, trailing only China. While China specializes in green tea production, India predominantly produces black tea, with green tea comprising only 10% of its output. Notably, India boasts a robust domestic market for its tea, with exports accounting for just over 15% of total production. The rise of small tea growers has significantly contributed to India's tea production, nearly matching the output of estate growers.

Concerns Over Stagnant Production, Prices, and Exports

The Indian tea industry faces several pressing challenges, including stagnant growth in production, pricing concerns, and sluggish export performance. Over the past 15 years, total annual tea production has witnessed a meager increase of 39%. Despite a recent uptick in 2020 attributed to disruptions caused by the Covid-19 pandemic, tea prices have remained largely stagnant for several years. Moreover, India’s tea exports have plateaued, with 2023 figures mirroring those of the previous year. Although India maintains a reputation for producing high-quality tea, international market dynamics subject it to fierce competition and price volatility.

Factors Contributing to Industry Vulnerability

The tea industry’s vulnerability is further compounded by escalating production costs, primarily driven by rising labor expenses. While labor costs continue to rise, tea prices fail to keep pace, resulting in diminishing profit margins. Labour shortages in tea estates exacerbate production challenges, leading to compromised tea quality and output.

Addressing Supply-Demand Dynamics for Improved Pricing

Key stakeholders in the tea industry highlight critical issues that warrant attention. Market concentration among a few major players often dictates tea prices, undermining sellers’ ability to set fair prices. Moreover, the influx of low-quality tea into the market depresses overall prices, negatively impacting the production of high-quality tea. To maintain tea quality, stakeholders propose early production closure, stringent regulations on tea waste sales, and imposition of minimum import prices for low-quality teas.

Current Status and Emerging Challenges

In 2023, North India’s tea production remained relatively stable compared to the previous year, although uncertainties loom over 2024 due to adverse weather conditions and pest infestations. P. K. Bhattacharjee, Secretary General, Tea Association of India said, “The tea industry faces new challenges concerning compliance with chemical residue standards set by regulatory authorities like FASSI (Food Safety and Standards Authority of India) and the Tea Board of India.” He also advocates for a level playing field and regulatory clarity to navigate these emerging challenges.


As the Indian tea industry commemorates two centuries of growth and innovation, it stands at a critical juncture poised for transformation. Addressing longstanding issues such as stagnant production, pricing concerns, and export challenges, while navigating emerging challenges, will be pivotal in chart-ing a sustainable path forward for India’s esteemed tea industry.

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