The Indian Tea Association (ITA), which is one of the frontline bodies of the Tea Planters Association, was founded in 1881. The association has contributed towards the development and growth of the industry coordination with the Tea Board of India. ITA member gardens provide employment to more than 4 lakh people.
The Tea Board of India was set up under Section 4 of the Tea Act 1953 in 1954. It is a statutory body of the central government, Ministry of Commerce. It consists of 31 members and is reconstituted every three years.
Tea Production in India
India is the second largest producer of tea and the largest black tea producer in the world after China. Major importers of tea from India are Russia, Iran, the USA, the UAE, the UK, etc. Some of the most common types of tea are black tea, green tea, oolong tea, and white tea among others. Black tea contributes to 96 per cent of the total exports. The majority of the tea production is carried out in the Eastern part of India, in Assam and West Bengal. Some of the varieties like Darjeeling tea, Nilgiri tea, and Assam are considered among some of the finest teas in the world. Darjeeling tea holds a GI tag and is also known as the ‘champagne of teas’. India’s total tea production for 2020–21 was 1,283 million kg, and in 2022 was about 984.67 million kg. India is also one of the top consumers of tea. About 80 per cent of the tea produced in India is consumed domestically.
Assam is the leading producer of tea accounting to about over 50 per cent tea production in India. Hill slopes bordering the Brahmaputra and Surma valleys are the main areas of production in Assam. West Bengal is the second largest tea growing state, accounting to about 24 per cent of the total tea production in India. Districts of Darjeeling, Siliguri, Jalpaiguri, and Cooch Bihar are the main places.
Tamil Nadu, Kerala, and Karnataka together account for 17 per cent of the total tea production in India.
Factors of Financial Crisis in the Industry
ITA has mentioned that the tea industry is passing through a phase of acute financial crisis due to prices not matching the rising cost of production. According to the ITA report, Tea Scenario 2023, CAGR (compounded annual growth rate) was around 4 per cent in the last decade whereas the cost of inputs grew at 9–15 per cent in the same period. So, the tea industry has faced a crisis due to the increased price of crucial inputs like coal and gas.
Before and after the independence, plantations were carried on like a commercial export-oriented activity. But from the 1980s, people were allowed to grow tea as an agricultural activity to create an earning opportunity for the states. Initially, the workers in tea plantations were tribals or labourers from the villages who were often exploited. But, with the growing awareness, the wages in the plantations were increased. Due to the growing cost of production, low volume, poor work culture, limited market, and rising competition, many companies exited the plantations.
There was an exponential increase in production due to the emergence of many tea growers in the last few decades. This has resulted in excess tea production leading to surplus tea stock. The exports have not increased enough to absorb the surplus tea production. The competition has increased, while the prices have not. So, the prices have reduced much more in 2023 than in 2022.
Thus, the financial crisis in Indian tea industry can be attributed to the
- increased cost prices but low profit,
- surplus tea production due to emergence of small producers, and
- declined exports, particularly to Iran.
Export of Indian tea to Iran is uncertain. The Iran market constitutes about 20 per cent of the total tea export from India. Iran has urged the Indian government to consider enhancing remission of duties or taxes on export products (RoDTEP) for high quality Darjeeling teas.
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