There seems to be no end to the woes of the Indian tea industry. Following massive floods in Assam recently, industry circles expect overall production to drop by around 25% from last year’s levels. In turn, this could lead to a corresponding reduction in exports and higher domestic prices, but there are no definite estimates from Tea association sources yet as they face another difficult year. India’s tea exports had dipped to 196 million kilos in 2021 but still earned USD 680 million in foreign exchange. The year before, in 2020, altogether 210 million kgs were sold abroad. Routine cultivation and work preparatory to production suffered in 2021 because of the Covid-19 pandemic. In North East Indian plantations the unusually dry summers and reduced rainfall believed to be the outcome of the global warming process, also posed a problem. Then followed a resurgence of the pandemic and the floods in Assam and North Bengal. And now, the outbreak of the war in Ukraine has made the supply of fertilisers uncertain and certain pesticides costlier.
Larger companies and producers tried to make up for such unexpected losses by trying to dispatch larger tea consignments abroad because supplies from Sri Lanka to the international markets had sharply declined. Producers in parts of Assam and North Bengal face a further challenge posed by the invasion of the Indian market by increasing sales in recent times of the cheaper, comparatively inferior varieties of Nepali tea. Industry circles estimate that Nepali producers are currently pushing around 20 million kgs of tea into Assam and North Bengal markets annually. This has led to an all-around loss for smaller producers in both States, as flooding of the market by the cheaper varieties from Nepal tends to depress going prices. Significantly, Nepali producers enjoy an advantage in that their ‘exports’ to India do not attract any kind of tax, levy or cess in India. On the other hand, any Indian tea exported to Nepal attracts a levy of 40%, which makes the existing competition between small growers in both countries patently discriminating and unfair. The Association of small tea growers has already written to the Union Commerce Ministry and the West Bengal Government, explaining their present difficulties and urging authorities to announce concrete steps immediately.
However acute as such problems are, industry analysts also argue that the major problems faced by producers and exporters are mostly generic. According to open-source information on the State of the industry, except for sporadic attempts, there has been no sustained quest for innovation or significant improvement attempted in cultivation, research, or other sectors in India, even as competition has increased among most countries for securing larger tea exports. With the cost of most inputs rising steadily over the years and the lack of adequate financial relief/subsidies from the Union Commerce/Finance Ministries, despite tea being a significant foreign exchange earner, profits have declined for producers. There is, however, one silver lining where the survival of the industry in India is concerned the strong, abiding demand for tea, the cup that cheers, among India’s teeming millions! The domestic demand for tea has kept the wheels of the industry moving even as exports have declined in ‘bad’ years. The number of tea-producing States in India, initially restricted to a few, is currently 15, which positively attests to the future of the industry at home.
