Tea industry need to focus on increasing orthodox production to meet rising global demand

By S .Singhania, President Tea Association of India

The last two years, during my tenure as your President, have seen large changes in our country, and in our industry. Various businesses, the world over, have had to adapt to major geo-political shifts, and have tried to deal with this by changing their products and the services they offer, as well as their delivery mechanisms.

Similarly, the tea industry in India also finds itself in a situation of disruption. We are now standing at a critical crossroad today. Despite India’s impressive economic growth, with an 8% increase in GDP in the first half of 2025-26, our industry confronts a contradictory situation, which calls for introspection and resilience. I shall delve deep into these challenges and present TAI’s perspectives on mitigating them. But first, let’s examine key industry data to better understand the challenges at hand.

Overview of Indian Tea Industry

Production –

Over the last 15 years, India’s tea production has increased by 35 percent, rising from 966 million kilograms in 2010 to 1,304 million kilograms in 2024.

On the global front, world tea production in 2024 stood at 7,074 million kilograms. India contributed 1,304 million kilograms, accounting for about 19% of the world’s total production. This firmly places India as the second-largest tea producer in the world, next only to China.

However, it is important to note that nearly 90 percent of India’s tea production comprises CTC tea. This highlights the need for greater initiatives and focused efforts to increase the share of orthodox tea production, in order to cater to evolving global demand and diversify our export basket.

The share of organised sector’s production of North India Tea Industry is 45%. The contribution of Small growers’ sector of North Bengal Tea industry in terms of total production in last 20 years has increased from 23% to 55 % in the year 2024.

Turning to the year 2025, tea production in India up to November 2025 has reached 1290.50 million kilograms, represents an increase of 17.63 million kilograms, or about 1.38 percent over last year. Based on present trend, total tea production in 2025 is expected to reach over 1350 million kilograms.

Looking at other major producing countries, Sri Lanka’s tea production during the January to November 2025 period has increased by 2 million kilograms, wherein Kenya has experienced a sharp decline, with production falling by 43 million kilograms, or nearly 10 percent, during the January to September 2025 period.

These developments underscore the changing dynamics of global tea production and highlight both the opportunities and challenges before the Indian tea industry.

Export –

Turning now to the global tea export scenario, total tea exports worldwide in 2024 stood at 1,956 million kilograms, including instant tea. Out of this, India exported 256 million kilograms, accounting for approximately 13 percent of total global tea exports, also signifying an increase of 11% compare to the previous year.

However, a significant structural imbalance remains. While India contributes about 19 percent of the world’s total tea production, its share in global tea exports is only around 13 percent. This gap highlights the need for focused strategies to enhance export competitiveness, value addition, product diversification, and greater penetration into high-value markets.

Bottom of Form

Import –

The Indian tea industry has, in recent years, been witnessing a steady increase in the quantum of tea imports into the country. This emerging trend merits close attention, particularly in the context of India being one of the world’s largest tea producers.

While the Tea Board of India has not published official import figures beyond October 2024, data obtained from the Monthly Economic Indicators Database, or MEIDB, maintained by the Ministry of Commerce and Industry, indicates that India’s tea imports are hovering around 45 million kilograms. This represents an increase of 22 million kilograms compared to 2023.

Prices –

The pressure on prices has further intensified in the current year. In 2025, the all-India average tea price declined by ₹12.31 per kilogram, representing a reduction of approximately 6 percent, falling from ₹199.30 per kilogram in 2024 to ₹186.99 per kilogram in 2025. In North India, the decline has been even sharper, with average prices falling by ₹16.73 per kilogram, or about 8 percent, from ₹221.57 in 2024 to ₹204.84 per kilogram in 2025.

Causes of Un-sustainability of the Indian Tea Industry-

1. Tea Prices not keeping up with the rising costs / inflation:

 This situation has arisen due to the rapid increase in costs of the organised tea sector, without a corresponding increase in prices at the farmgate level. The graph on the screen depicts the rise in Wages, essential Inputs and Prices of the Tea industry in India in last 10 years.

Being a labour intensive industry, wage comprises 60% of total Cost of Production and therefore any impact on wages has a far-reaching consequence on the industry’s sustainability. The chart also shows the Wage increase in last 10 years with near double digit growth in CAGR.

It is therefore important that a harmony is reached between the Cost of Production and price realisation, increase in wages and other inputs.

1. Stagnant Tea Prices due to Demand Supply Mismatch in the Indian Tea Industry:

The Prices have not risen due to the mismatch of demand and supply of tea, with supply of tea rising rapidly in the recent past, which outstripped consumption of tea in the country, leading to stagnant selling prices for tea.

• Effect on Climate:

TRA in the recent times has shown in map the current suitability of tea production areas in Assam with future projection for 2050, where the main Tea growing districts of Assam namely Dibrugarh, Sibasagar, Jorhat, Golaghat, Lakhimpur, Sonitpur and Udalguri will be barely suitable for cultivation of tea by 2050.

1. Cost Structure of Regulated Tea Growers Vs Small Tea Growers :

 We also have a dual business model which has emerged, with completely different costs of production, which creates a dichotomy in the tea industry, with Estate and the Small Grower sectors having significantly different costs of production, with different welfare responsibilities compete with each other with no level playing field.

1. Import of Cheaper Teas:

 Import of cheap quality teas has increased significantly. Restricting these imports is crucial.

Duty Free Tea imports from Nepal has been an area of concern as Teas from Nepal are reportedly sold in the domestic as well as International market as Darjeeling teas thereby diluting the brand image of Darjeeling Tea and adversely impacting the prices. Moreover imports from Kenya are re-exported as Indian origin rather than Multi origin. A portion of duty free import for re-export is penetrated into domestic market by-passing the import duty thus denting the domestic market sentiment.

1. Domestic consumption:

Per capita consumption of tea in India is as low as 840 grams per head/year as compared to 1.61 kg. per head in UK. Even in neighbouring Country of India, for example Pakistan has a consumption of 1.01 kgs per head per year.

An increase of even to 100 gram per capita consumption would consume another 131  MKgs annually leading to Demand-Supply Equilibrium.

This is only possible with focus on Generic promotion through Marketing strategies involving E-Commerce and Digital Marketing and engaging respected public figures to promote tea along with enhancement in quality and value addition.

Mitigating Challenges:

We need concentrated efforts to mitigate the challenges. Efforts from all stakeholders along with policy initiatives both by the Central and State Governments are required to overcome these challenges and make the industry sustainable.

Some of the ways are-

1. Minimum Sustainable Price for Tea:

The Tea Industry being primarily and essentially an agricultural activity, is prone to the phenomenon of increasing rise in Cost of Production which is not reflected in the realized prices in the recent times.

We appeal to the Tea Board to work out an effective mechanism to implement a Minimum Sustainable Price for Tea based on cost of production with certain quality parameters. This, if properly enforced, would be useful for all the stakeholders of the industry, and would have an impact on improving quality of green leaf and the tea made. This would also allow the workers in the Small Grower segment to earn a fair wage, in line with the wages being earned in the organised sector. This would allow the consumer to get a better quality product, for which she will be able to pay a better price, and help the estates to receive a remunerative, sustainable price.

Minimum Sustainable Price should be determined on the basis of cost of production of all the tea that is sold in the internal market should be above the production cost plus 50% margin, thereby providing a margin of profit on the produce, which will be in line with the call of our Hon’ble Prime Minister for an “Atmanirbhar Bharat”.

1. Import Issues:

As stated earlier, the Indian Tea Industry has been witnessing a steady growth in the quantum of tea imported to India in the recent years.

We would like to bring a matter of growing concern regarding the misuse of the Advance Authorization Scheme and duty-free imports via Special Economic Zones (SEZs) for teas. While these provisions were originally intended to promote export-oriented manufacturing, they are now being leveraged in ways that are distorting the domestic tea market and compromising the integrity of Indian teas in global markets.

Despite a notable surge in tea imports last year, there is currently no effective mechanism to trace how much of this tea has actually been re-exported versus how much has been diverted into domestic circulation.

 We from this forum request to Disallow duty-free import of tea under Advance Authorization and SEZ provisions, instead, allow imports only upon full duty payment under Duty Draw back on re-export of duty paid goods as per section 74 of Customs act.

Further, we must ensure that stringent quality control measures are in place to prevent substandard teas from entering India. In this regard, we would like to draw attention to the Sri Lankan Tea Board’s SOP for import and re-export, which provides a robust model of accountability.

We strongly urge Tea Board of India along with the Director General of Foreign Trade to consider similar mechanisms for India so that all tea imports for re-export are traceable and auditable; Quality standards as per FSSAI norms are strictly enforced and Domestic diversion of imported tea is prevented.

3. Allowing the organized Tea industry to avail schemes provided under the ambit of Ministry of Agriculture and Farmers Welfare, Govt. of India

Tea comprises “primarily agricultural” activities as Agricultural Income Tax is leviable and majority of workers almost 80% are engaged in agricultural activities. Moreover, “Plantation” of Tea is essentially land based which is a prerequisite for any agricultural activity.

The organized sector which employs more than 1.1 million of people should have access to various flagship schemes under the Ministry of Agriculture and Farmers Welfare, Govt. of India for its sustainability such as-

1. Pradhan Mantri Krishi Sinchai Yojana
2. Pradhan Mantri Fasal Bima Yojana
3. Soil Health Card Scheme
4. Rastriya Krishi Vikas Yojona
5. The National Agriculture Infrastructure Financing Facility
6. National Agriculture Market (e-NAM): etc

4. MRL & FSSAI Issues:

We are all aware that climate change resulting in rising temperatures and prolonged dry spells have created an ideal situation for pest infestation in the North Indian tea growing regions in recent times.

The present approved chemicals have limitations in controlling pests and TRA has conducted trails on certain new generation molecules which were found to be extremely effective against pests.

The Tea Research Association (TRA) has generated data and submitted a complete dossier for Imidacloprid (17.8% SL) and Acetamiprid (20% SP) to the Central Insecticides Board and Registration Committee (CIB&RC) through Rallis India which demonstrated significant bio-efficacy against pests with 90-96% effectiveness in controlling the Tea Mosquito Bug.

However, the approval for above two chemicals is still awaited.

There are few Chemicals where CIBRC has issued the Registration Certificate, but the MRL for the same are yet to be notified by the FSSAI.

It appears highly contradictory that while the approval of label claim is given by the CIBRC based on MRL generation by FSSAI, these values are not indicated in the orders issued. These values are made public only after the FSSAI issues a gazette notification, a process that often takes many years after the approval is conveyed by the CIBRC. This allows growers to use the newly approved pesticides, but without the upfront availability of the target MRL, which is often provided as 0.01 ppm as default MRL.

We are merely surviving a situation of compromise and governance without a robust scientific rationale. Merely including the newly approved chemicals listed by the CIBRC in the PPC provides the growers with an additional arsenal for fighting the onslaught of a pest or disease, but without the MRL, the whole exercise become futile.

It is beyond understanding what harm there is if the CIBRC order conveying approval of the label expansion is also accompanied by the designated MRL—which is already available with the FSSAI and the CIBRC, pending publication of the consolidated gazette notification for all FSSAI-approved pesticides.

It is our understanding that, for a commercial crop like tea, the Ministry of Commerce should spearhead the responsibility for its growth and promotion holistically, in coordination and convergence with other relevant ministries at the highest official level. We sincerely request the Tea Board of India to take a bigger lead, forging collaboration with authorities of other relevant line departments and ministries to steward the sector to greater vibrance and prosperity.

1. Auction Matters:

We are thankful to the Tea Board of India for extending the provision of 100% Dust Auction till 31^st December 2025 and request to extend the same for another term.

However, it is noted that around 50% of the registered marked tea have not been offered for 100% Dust Auction. This issue has been flagged by Tea Association of India before the Tea Board on number of occasions and we are happy to note that action is initiated by Tea Board to this effect. These violators need to be penalized.

We further would most humbly like to point out few points in respect of the SOP in force in respect of 100% Dust Auction.

The original SOP Dtd. 22^nd April 2024 allowed the sellers to use the second set of samples for appeal purpose. The above provision however removed during the publication of the revised SOP Dtd. 2^nd May 2025.

Since, the samples are drawn according to FSSAI norms, we urge that Tea Producers be allowed to re-test samples that are deemed non-compliant, in accordance with FSSAI Regulations and also request the clause to amend suitably.

We further request that once the teas come out, the Producers be allowed to withdraw and sell it through private channel as it is putting a lot of cash flow pressure on the producers.

We would also like to bring your kind attention that a huge quantity of tea is lying in different Warehouses as these were deemed non-compliant by Tea Board.

The present SOP suggests the sellers of such teas be required to approach the Board for destruction of such teas, as per the existing practice, whereas as per Section 28 of the FSS Act, 2006, and the FSS (Food Recall Procedure) Regulations, 2017 allows the food business operator to correct or re-process the contaminated food, the facility of which may be extended to the Tea sector as well.

1. Availability and Cost of Finance:

Because of the uneconomical industry scenario in the recent years, Tea Estates and Companies are under severe financial stress and are stretched for funds even for regular operations, leave alone for developmental work. Bank financing to the sector needs to be enhanced. Steps such as moving tea to the priority sector for lending, and conversion of working capital loans to term loans on easy terms and a moratorium for repayment will be needed to keep the operations and development of tea companies going. We also appeal to the Government to organise interest subvention for tea working capital limits to reduce the cost of finance, since Tea Estates are predominantly engaged in a plantation operation.

1. Export bottlenecks:

Indian Tea Export is also being hampered due to various logistical issues such as

1. Export Infrastructure:
2. Transportation modal:

• Management of The Logistics value chain:

1. Inadequate Dry port facilities and
2. Supportive Infrastructure:

We need Governmental support to overcome these issues.

8. Panchayat Schemes:

The responsibility of taking care of the welfare and in-kind benefits of the workers, by the organised estates has a historical basis. These were imposed on the tea plantations from the days when the government was not widespread in the plantation areas. Now the government machinery is well spread and covers all the areas where tea plantations exist.

Tea Association of India urges that the responsibility to provide Welfare Facilities as noted Under Chapter-VII, Code 24 of the  Code on Occupational Safety, Health and Working Condition be replaced by the National flagship missions of Government of India i.e. PMAY, Ayushman Bharat, Har Ghar Har Jal, Right to education, etc.

We suggest that the welfare provisions for the tea estate work-force be taken over by the governments, leaving the Tea estate managements to focus on making proper quality and compliant teas efficiently.

Since the Tea Industry is essentially seasonal in nature, flexibility in working hours should be incorporated during lean period and reduction of employment during lean season should be allowed. The reduced permanent workforce during lean season could continue to get the in-kind benefits such as Housing, Medical benefits etc but than cash wages may be substituted by paying through the “MGNREGA Scheme” of the Government.

We are grateful to the Govt of Assam for taking initiative for creating a dedicated digital portal to streamline the implementation of schemes taken under MGNREGA in Tea Garden areas.

1. Tea Development and Promotion Scheme 2026 onwards:

With the Tea Board, India formulating the TDPS from 2026 onward and several consultations have already been organized, we would like to point out that with the world tea supply position steadily increasing, the focus areas for the new scheme should be productivity enhancement from the existing tea area through consolidation rather than expansion of the tea area, quality improvement through appropriate quality up gradation measures, technology intervention, cost reduction, use of green and clean energy and market development so as to face effectively the emerging international completion in the context of a free market economy. While formulating the new scheme these broad and need based objectives needs to be given due consideration.

Support in respect of the following is essential for the organized sector-

1. Plantation Development:
2. Revival and development of Dilapidated Tea Plantations:
3. Creation of Irrigation facilities & Field mechanization:
4. Factory Modernization
5. Value addition
6. Incentive for orthodox and green tea production
7. Technological intervention such as Drone Surveillance, Precision Farming, Traceability and Block chain technology etc
8. Market promotion:
9. Utilization of clean energy and
10. Carbon Credit:

1. Agritech Innovations

One of the major problems the Tea Estates are facing at present is the absenteeism by the workers. Many Tea Estates have reported absenteeism ranging from 25-45% during peak period. It severely hampers the quality production.

Technological intervention can play a transformative role in addressing both rising costs and Workers shortage and productivity matters including adaption and mitigation of Climate Change.

Automated plucking machines, can reduce long-term labour costs and address labour shortages, while resulting to enhanced field technologies.

Drones can be employed for aerial surveillance, providing insights into crop health and identifying areas needing attention, thus pre-emptively managing pest and disease outbreaks.

However, automation in the Tea industry has also been challenged by existing provision of an Agreement signed way back in 1969, wherein the organised Tea Estates are mandated to maintain certain strength of workforce throughout the year.

I would like to emphasize on certain recent developments, which has the potential to effect the industry to a great extent.

1. Changing Labour Laws:

 Implemented Nationwide from 21^st November, 2025 the four new Labour Codes namely Code on Wages, Occupational Safety Health and Working Condition code , Code on Social Security and Code on Industrial Relations consolidated 29 previous laws into a streamlined framework of four comprehensive labour codes making a historic landmark.

These Codes enhance Social Security by maintaining Provident Fund, Employees State Insurance and Gratuity for all workers, including those in unorganized sector.

To boost women workforce participation provisions including extended maternity leave, crèche facilities, flexible working hours and addressing berries that have kept the female labour force participation.

Uniform minimum wages across industries and simplified compliance, reducing filling up statutory forms from hundreds to few should make it easier for business to hire, potentially creating millions of jobs while protecting venerable workers from exploitation.

The Codes thus focus on inclusivity and positioning them as catalyst for a more equitable labour market.

2. Land Patta Matters: (Assam and West Bengal)

 While, we appreciate the intent of the Govt of both Assam and West Bengal to provide land patta for the Tea Garden workers, we request both the respective Government to kindly keep the following in mind before implementation-

Land Pledged with Bankers: For the majority of the Companies, Tea garden land is pledged as collateral to banks. Any transfer of this land would create financial and legal complications.

Compensation for Structures: The Land Ceiling Act pertains to land, not structures. Compensation for company-built assets such as Labour Quarters, etc. would need to be addressed separately. The Management needs to be adequately compensated under the provisions of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013.

Statutory Obligations: The Plantations Labour Act 1951, which is now subsumed into Occupational Safety, Health and Working Conditions Code, a central law, mandates to provide housing and other amenities to workers. State-level action on land distribution does not absolve management from these statutory obligations. Unless the present Act is amended, managements would remain responsible for housing, even after the land is transferred.

We sincerely appeal to both the State Governments to address the above issues.

Tea Association of India has also petitioned Government of West Bengal to facilitate undertaking of projects mentioned in Tea Tourism & Allied Business Policy 2019 by introducing a long term lease of 99 years at a rate of Salami based on a certain percentage of current market rate of the land along with annual rent as is been permitted for land held by Jute industry vide notification dated 18^th February 2020.

This will greatly assist the Tea Garden to enhance viability of Tea Garden and generate employment which shall be conducive for economic growth.

1. Assam Tea Industry Special Incentive Scheme (ATISIS 2020):

The Assam Tea Industry remains deeply grateful to the Government of Assam for launching the Assam Tea Industries Special Incentive Scheme (ATISIS 2020) in November 2020.

This scheme exhibits the State Government’s effective and progressive action towards the Tea industry of Assam in true sense.

However, it has been reported that disbursement of subsidy remains unpaid to several Tea Gardens and Manufacturing units in previous periods.

In a Notice issued by the Finance Department, Govt. of Assam on 7^th November 2025, it was communicated that the Benefits under ATISIS 2020 for a particular financial year will be disbursed based on State’s budget availability for that year only. Henceforth there will be no carry forward for payments of benefits in the next financial year.

The above notification has put the industry in distress as some of the eligible applicants despite fulfilling all formalities within the stipulated timeline have not got the subsidy.

In view of the above, the industry earnestly request to consider releasing of payment of all pending subsidies under ATISIS 2020 at the earliest.

We further request to disburse the subsidy due for the current year at the earliest, as it shall provide a much needed financial succor to the industry during this lean period.

1. Tea Board Pending Subsidies

The issue of pending subsidy which is now well over five years has assumed urgent importance in view of the acute liquidity crunch faced by the tea industry, particularly in West Bengal.

This matter has been repeatedly raised by the Tea Association of India at the Executive Body Meetings of the Tea Board of India and also represented to the Hon’ble Finance Minister, the Hon’ble Minister of Commerce & Industry, Shri Piyush Goyal, and the Parliamentary Standing Committee on Commerce.

The Association urges the apex Board to expedite liquidation of the substantial backlog of pending subsidies, which would provide immediate relief to an industry under severe financial stress.

1. Regenerative Energy (Govt of West Bengal):

The Association is grateful to the Govt. of West Bengal for notifying the West Bengal Electricity Regulatory Commission (Grid Interactive Rooftop Solar Photovoltaic System for Prosumers) Regulations, 2025 on 21^st July 2025.

Under the new Regulation, a prosumer may opt for net metering, net billing or gross metering mechanism to set up a Grid interactive Rooftop Solar Photovoltaic System in the Tea estates.

It is leant that the Department is in the process of finalizing a SOP in this regard. A new Form C has been devised awaiting DRC’s approval and the software is under development.

We shall be grateful if the entire process is expedited so that the consumers can start applying on-line.