In a major breakthrough for the Indian Tea Industry, the Tea Board of India, under the Ministry of Commerce and Industries, has announced a new scheme for its development and growth. This new scheme comes after the Tea Board observed in May that Tea production, especially in Assam, one of the largest tea-producing states, had dropped by 40% compared to the previous year.
The Tea Board of India recently stated that the future of the tea Industry was looking bleak. Production is dropping, production prices are going up, and domestic demand is behind many other countries.
For context, India is the world’s second-largest tea producer, only behind China. Of this amount, 53% comes from the northeastern states like Assam, West Bengal, etc. Assam is the largest tea-producing state in India, contributing a significant portion of the country’s tea production. With the recent fall in production, the Tea Board felt it necessary to include stakeholders of the tea industry to contribute to its growth and revival, hence the scheme we are about to discuss.
Overview of the New Scheme by Tea Board
The latest scheme by the Tea Board for the development and revival of the tea industry in India is called the ‘Tea Development & Promotion Scheme’. It has been allotted a budget of Rs. 664.09 crore. “It is envisaged that right from the field to the cup, every aspect of the tea industry would be touched upon and lead to holistic development,” a statement by the Tea Board said.
The duration of the scheme is from October 3 2024 to March 31, 2026. The gist of the scheme is to promote sustained growth and address the various challenges by invoking the attention of the various stakeholders of the tea industry namely, the Government of India, the Tea Board, small tea growers, large estates, and exporters of tea.
There are six core components of the Tea Development and Promotion Scheme, namely:
Plantation Development: This component focuses on replanting and rejuvenation of old and low-yielding tea bushes. Large tea estates (over 10 hectares) will receive financial assistance in order to replant old tea bushes that have dropped in productivity. Financial assistance is also provided for the planting of new, high-yield varieties and the rehabilitation of existing plantations to increase productivity.
Strengthening the tea industry through this holistic approach is expected to boost per capita consumption of tea domestically and contribute to better price realisation and increasing India’s share in tea export markets as a step towards making the industry sustainable,” the statement added.
Quality Upgradation: The scheme also focuses a lot on upgrading the quality of the tea produced in the country. The scheme financially supports research, soil testing, organic methods of tea production, and enhancement of soil fertility.
Enhancing the quality of tea would not only attract more domestic customers, it would enable the producers to be able to charge more and combat the dropping prices that make the investment undertaking of growing tea far less appealing.
Self-Help Groups (SHGs) and Farmer Producer Organisations (FPOs) are also recognized under this scheme and will be helped in increasing quality. In addition, these groups will be supported in setting up mini-tea units for producing orthodox, green, and speciality teas.
Tea Promotion and Market Support: Registered companies and associations producing tea will be helped in their branding and marketing efforts as well, including the creation of campaigns aimed at increasing exports of tea, and increasing the international market share of Indian brands.
Financial assistance under this scheme will also be provided to Indian-origin tea cafes. Tea production has recently suffered great losses due to flooding and heat flashes in the tea-producing regions of Northeastern India.
Technological Intervention: The scheme will also provide financial support to laboratories that test and approve of tea variants and verify their quality. Technological upgrades matter a lot in the case of crops that are extremely sensitive to water levels, ambient temperatures, and the surrounding climactic conditions.
Improvements in the technology involved in tea production will lower production costs and make tea cultivation more attractive, bumping the amount of tea produced.
Research and Development: Obviously, for a cash crop such as tea, and one which brings in a lot of valuable foreign exchange, research and development measures are essential.
The Tea Development and Promotion scheme involves robust measures for conducting research into the tea industry and the various qualitative changes that can be made in the production process to improve the quality of tea and make it more resistant to the weather conditions of Indian tea estates.
Welfare and Capacity-Building Measures: This scheme also ensures the social and economic welfare of tea garden workers, providing better healthcare, housing, and education for workers and their families. This component is crucial in addressing labour issues and improving the living standards of workers. If the labour and workers involved in the production of tea cannot live sustainably, tea production can never be ramped up.
This component provides financial assistance and technical guidance to small tea growers, helping them improve their cultivation techniques, adopt modern practices, and access better market opportunities. It focuses on the empowerment of smallholders who contribute significantly to India’s tea output.
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Tea Industry Gets Rs 664 Cr Push for Modernisation & Expansion
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Sustainability and Innovation in the Tea Industry
The Indian tea industry was valued at 11.1 Billion US Dollars in the year 2023. Such scale, even at the primitive and still to be touched by technological innovation methods used means there is a lot of scope for India to improve its methods. In the same process, the lives of the farmers and the quality of the land and tea estates can also be increased by promoting sustainable practices.
Some of the sustainable tea cultivation practices used in India are:
- Water Conservation: Since water has become quite an important resource that needs to be conserved, Tea plantations are implementing water-efficient irrigation methods such as drip irrigation to reduce water consumption and improve crop yields, especially in regions facing water scarcity. Large-scale application of drip irrigation, among other water conservation methods can allow farmers to produce more tea for the same amount of water available for irrigation.
- Agroforestry: Agroforestry is a relatively new farming practice that involves planting plants and trees intermittently, Integrating tree cover and diverse plants. In tea-growing areas, agroforestry helps maintain soil fertility, control erosion, and create a balanced ecosystem. Agroforestry also promotes carbon sequestration, contributing to climate change mitigation.
On the other front, farming methods are using more and more technological resources to produce, leading to better results. Scientific research is also bent on producing climate change-resistant varieties of tea, which would ensure that natural calamities like heat waves and irregular rain patterns do not affect tea production as much as they do now.
Farms are using IoT devices, sensors, and soil health meters to make data-driven decisions in the cultivation of tea. Again, large-scale implementation of such technology and appropriate training to the existing farms can revolutionize the tea industry. Research into pest-resistant and climate-resistant varieties when combined with innovative technology can lead to groundbreaking results.
Challenges Plaguing the Domestic Tea Industry in India
According to Down To Earth Organisation, tea cultivation on medium-sized (10 Ha) land requires an investment of approximately 40 Lakh Indian Rupees. At such a high cost of production, tea cultivators are rapidly switching from tea to other cash crops as well. This abandonment of monoculture, while a very good practice for the farmers who aren’t able to realize apt gains on tea, leads to an overall reduction in the tea capacity.
European importers have shifted to Sri Lankan, Kenyan, and Indonesian teas for their imports since the cost of production for tea in these countries is lower than in India now. This downward trend in the tea industry has been observed since 1999.
The main challenges faced by the Indian tea industry are:
- Low Productivity and Aging Bushes: Many tea plantations in India have ageing tea bushes that are over 50 years old, leading to low yields in the modern years. In Darjeeling, for example, over 50% of the tea bushes are more than a century old. Replanting becomes essential, but the tea plant requires at least three years of growth before the plant becomes ready for harvesting. It is a time and money-consuming process; hence estates stick to producing whatever the old bushes can produce.
- Labour Shortage and High Wages: The tea industry is labor-intensive, and there’s a growing shortage of skilled workers, particularly in remote areas. For small tea growers, which are the majority in regions such as Assam, the tea capital of India, hiring skilled workers and expanding operations is next to impossible with the already low-income lifestyle they are forced to lead.
- International Competition and Branding: Countries such as Kenya, Indonesia, and Sri Lanka have adopted organic farming methods far before India, leading to a lower cost of production than India, and consequently more demand in international markets from these countries. Organic farming methods still prove to be costlier than the average tea farmer can afford, leading to a low adoption rate among Indian tea cultivators. Organic certification is still a bureaucratic and slow process, leading farmers away from organic methods of tea farming.
- Climate Change: perhaps the biggest contributor to a decline in the Indian production of tea is the erratic climatic conditions in the past few years. Tea is highly sensitive to climatic conditions. Erratic rainfall, rising temperatures, and unpredictable weather patterns due to climate change are affecting tea yields and quality, particularly in Assam and Darjeeling, the highest quality producers of tea in India, and also some of the most voluminous.
- Declining Domestic Consumption Growth: While India remains one of the largest consumers of tea, the growth rate of domestic consumption is tapering off, particularly in urban areas where other beverages such as coffee, green tea, and flavored drinks are gaining popularity. International producers are much more successful in swaying the younger and upcoming generations to prefer other drinks to tea, making the customer base of tea smaller in India.
Key Players in the Indian Tea Industry
The Indian tea industry is confined to only a handful of large retail sellers, even though the number of tea cultivators is high. Such cultivators source from many of these farms and estates and undertake the responsibility of processing the produce, and then selling it under their own brand name.
The two largest tea retailers in India are:
- Tata Consumer Products: Tata holds a substantial 21% in the Indian tea markets, making it the second-largest retailer of Indian tea. They have established and consumer-loved brands of tea in India such as Tetley and many variants of Tata Tea, which are both household names in the tea drinkers’ vocabulary.
Tata is a huge conglomerate with a large pool of resources, which can be directed to solve the issues plaguing the Indian tea industry, especially in terms of branding and R&D. - Hindustan Unilever: Hindustan Unilever is the biggest retailer of tea and other malted drinks in India. They own and operate sub-brands such as Red Label, Brooke Bond, Taj Mahal, etc. which are all very famous tea brands.
HUL’s international ties (since it is the Indian subsidiary of Unilever) can be most beneficial in terms of capturing the international tea market if sustainable sourcing and distribution channels can be established.
Apart from tea retailers, government bodies such as the Tea Board of India, and other smaller cooperative bodies of tea producers such as the Small Tea Growers Association, Darjeeling Tea Association (DTA), etc. are most important in shaping the upcoming trajectory for the Indian Tea market. Securing Tea Board License from the Tea Board of India is the need of the time.
The voices and opinions of the smaller cooperative and SHGs (Self-Help Groups) can demonstrate to the government bodies (Such as the Tea Board) the problems being faced by the tea cultivators in reality.
In the Nutshell
As far as anyone can see, the formation of this new scheme and the 664 Crore grant is a step in the right direction, but it cannot nearly be enough to transform an entire industry that is in heaps of trouble. Unless India can promote widespread adoption of organic tea farming practices, and boost the marketing efforts of Indian tea producers to stimulate demand, the tea industry is going to continue to decline.
The Indian government, through its policies on subsidies, export incentives, and schemes like the replantation and modernization fund, can act as a significant benefactor to ensure the industry’s long-term sustainability. Government-backed initiatives focused on improving infrastructure, promoting exports, and ensuring labour welfare can directly benefit the tea industry as well. Thus, the new Tea Development and Promotion Scheme is a step in the right direction.
To get expert assistance in Tea Board Registration and better insights on the tea industry of India, visit https://corpbiz.io/.
Frequently Asked Questions
What is the revenue of the tea industry in India?
The Indian tea industry generates substantial revenue, with an estimated market size of around ₹25,000 crore ($3.2 billion) annually. India's tea exports contribute significantly, with major markets in the U.S., U.K., Russia, and the Middle East. Domestic consumption also contributes significantly to this number, although its growth rate has been declining.
What is the market share of the Indian tea industry?
India holds a market share of approximately 23% of global tea production, making it the second-largest tea producer worldwide, after China. Domestically, the Indian tea market is dominated by large players like Tata Consumer Products and Hindustan Unilever, with the organized sector capturing nearly 55% of the retail market.
Who is the largest producer of tea in India?
The state of Assam is the largest producer of tea in India, accounting for more than 50% of the country’s total production. Assam is known for its robust black teas, contributing significantly to both domestic consumption and exports. West Bengal (Darjeeling and Dooars) is another key region for tea production, particularly premium varieties.
Is tea farming profitable?
Tea farming can be profitable, especially for large estates with economies of scale. Profitability depends on factors like the size of the plantation, yield per hectare, labour costs, and market prices. For small tea growers, profitability can be challenging without access to modern farming techniques, financing, or market linkages. Organic or speciality teas offer higher margins.
What is the Tea Board of India?
The Tea Board of India is a government body established under the Tea Act of 1953 to promote the cultivation, processing, and domestic and international marketing of Indian tea. It provides financial and technical assistance to tea growers, regulates tea exports, ensures quality standards, and conducts research to improve production techniques and tea varieties.
What are the top 5 tea-producing states in India?
The top tea-producing states in India are:
– Assam: Leading in black tea production.
– West Bengal: Known for Darjeeling and Dooars tea.
– Tamil Nadu: Produces Nilgiri teas.
– Kerala: Specializes in high-quality tea from the Western Ghats.
– Karnataka: Produces smaller volumes but contributes to the overall output.
Read our blog: 10 Benefits of Registering with the Tea Board of India
