India's Tea Industry Faces Persistent Market Stress Amid Climate Risks, Import Pressures and Changing Consumer Demand Patterns

Recent Developments:

• India's tea market has remained in a deflationary phase for nearly four to five quarters as adverse weather, low-priced imports, and a shift in consumer preference towards cheaper brands and the unorganised sector have compressed profit margins of major tea companies.
• According to Tea Board of India, tea exports continued to remain robust, while the Board has also introduced the online Tea Mark Licensing Portal and strengthened Tea Mark Certification guidelines to improve traceability, quality assurance and export competitiveness.
• The Tea Board of India has also expanded quality surveillance through updated NABL-accredited laboratories and certification mechanisms to ensure compliance with domestic and international quality standards.

About Tea:

Tea as an Agricultural Commodity:

• Tea is produced from the leaves of Camellia sinensis and is the world's second most consumed beverage after water.
• India is the second-largest tea producer globally and among the leading tea-exporting countries.
• Tea cultivation supports millions of livelihoods through plantation employment, small tea growers, processing units, auctions, logistics and exports.

Tea Board of India:

• The Tea Board of India is a statutory body established under the Tea Act, 1953 under the Ministry of Commerce and Industry, with headquarters at Kolkata.
• The Board promotes cultivation, production, quality improvement, research, domestic marketing, exports, branding, certification and welfare of the tea sector, while also regulating the use of the Tea Mark.

Agro-Climatic Requirements:

• Climate: Tea thrives under hot, humid tropical and subtropical conditions with prolonged frost-free periods.
• Temperature: The optimum range is 20–30°C, while temperatures above 35°C or below 10°C adversely affect plant growth and leaf quality.
• Rainfall: Well-distributed annual rainfall of 150–300 cm with adequate humidity supports optimum productivity.
• Soil: Tea grows best in well-drained, porous, acidic soils that are low in calcium and rich in organic matter.

India's Tea Production Scenario:

Production Trends:

• Tea production has remained broadly resilient despite periodic fluctuations caused by climatic variability, pest attacks, ageing bushes and labour shortages.
• Production increased from 1,267.36 million kg (2016) to 1,390.08 million kg (2019), declined during the pandemic to 1,257.53 million kg (2020), recovered to 1,393.66 million kg (2023), moderated in 2024, and improved again to around 1,370 million kg in 2025.

Regional Concentration:

• India's tea production remains geographically concentrated, making national output vulnerable to regional climatic disturbances.
• Assam and West Bengal together contribute more than 80% of total production, while Tamil Nadu, Kerala, Tripura, Himachal Pradesh, Uttarakhand and a few North-Eastern states contribute comparatively smaller shares.
• Heatwaves, floods, erratic monsoon rainfall and landslides in Assam and North Bengal have a disproportionate impact on national production and prices.

India's Tea Trade Performance:

Exports:

• Tea exports have shown steady growth in both quantity and value, indicating improvement in India's global market presence.
• During 2024–25, India exported about 263 million kg of tea valued at around ₹7,818 crore, while exports during April–December 2025–26 exceeded 223 million kg.
• India's share in global tea production is significantly higher than its share in global exports, indicating substantial scope for expanding export competitiveness and value addition.
• Major export destinations include the UAE, Iraq, Russia, China, United States, Iran, United Kingdom, Germany, Saudi Arabia and Türkiye, with the top twenty markets accounting for nearly 88% of total exports.

Imports:

• Tea imports generally account for only 2–3% of domestic production and are primarily used for blending, re-export and value addition.
• Imports increased sharply during 2024–25, raising concerns regarding domestic price stability, quality assurance and market competition.
• Growing imports from Nepal and Kenya have intensified competitive pressure on domestic producers by lowering auction prices and increasing price volatility.

Factors Behind the Current Slowdown:

Climate Change and Weather Extremes:

• Prolonged heatwaves, irregular rainfall, floods and landslides have reduced tea yields, deteriorated leaf quality and increased pest infestations.
• Climate variability has shortened harvesting cycles, reduced production of premium-quality tea and increased irrigation and plantation management costs.

Cheap Imports and Price Competition:

• Low-priced imports from neighbouring countries have increased downward pressure on domestic auction prices.
• Since tea largely functions as a commodity market with relatively low brand loyalty, consumers often switch to cheaper alternatives during periods of inflation or income stress.

Consumer Behaviour:

• Consumers have increasingly shifted towards low-cost sub-brands and products supplied by the unorganised sector, reducing the pricing power of organised tea companies.
• Premiumisation strategies have achieved only limited success because tea remains a highly price-sensitive daily consumption product.

Rising Cost of Production:

• Labour wages, fertilisers, energy, transportation and plant protection costs have increased faster than tea prices, compressing profit margins.
• Restrictions on several pesticides have increased production costs by requiring costlier alternatives while ensuring higher food safety standards.

Supply Chain Disruptions:

• Temporary LPG shortages linked to geopolitical disruptions in West Asia reduced household fuel consumption, indirectly affecting tea consumption in some regions.
• Weather-related disruptions have also affected transportation, auction arrivals and timely marketing of tea.

Structural Challenges:

• Ageing tea bushes, inadequate replantation, fragmented small holdings, limited mechanisation and declining productivity continue to constrain long-term competitiveness.
• Small tea growers remain highly vulnerable to volatile auction prices and increasing input costs.

Significance of the Tea Sector:

Economic Importance:

• Tea is one of India's major plantation crops contributing to agricultural output, export earnings and rural industrialisation.
• The sector supports extensive forward and backward linkages through packaging, logistics, warehousing, auction platforms and international trade.

Employment Generation:

• The industry provides direct and indirect employment to millions of workers, with women constituting a significant share of the plantation workforce.

Regional Development:

• Tea cultivation plays a crucial role in the socio-economic development of Assam, West Bengal, Tamil Nadu, Kerala and several North-Eastern states.

Foreign Exchange Earnings:

• Tea exports contribute to India's agricultural export basket and strengthen the country's presence in premium global beverage markets.

Challenges for the Tea Industry:

Economic Challenges:

• Persistent commodity price volatility, declining profitability and market concentration increase financial risks for producers.
• Heavy dependence on a limited number of export destinations exposes India to geopolitical and demand-side shocks.

Environmental Challenges:

• Climate change, increasing frequency of extreme weather events, pest outbreaks and declining soil health threaten long-term sustainability.

Institutional Challenges:

• Limited investment in replantation, inadequate technological adoption, fragmented supply chains and insufficient branding reduce international competitiveness.

Way Forward:

Strengthening Competitiveness:

• Promote premium teas, speciality teas, Geographical Indication (GI) products, organic tea and value-added products to improve export realisation.
• Expand market access through diversified export destinations and stronger trade diplomacy.

Climate-Resilient Tea Cultivation:

• Encourage climate-resilient varieties, efficient irrigation, integrated pest management, soil conservation and scientific replantation programmes.
• Strengthen early warning systems and weather-based advisory services for plantation management.

Institutional and Policy Measures:

• Improve quality certification through Tea Mark, strengthen testing infrastructure, support digital marketing and modernise tea auctions.
• Enhance financial support for small tea growers, promote mechanisation and expand research through specialised tea research institutions.

Value Addition for UPSC:

Important Institutions:

• Tea Board of India
• Ministry of Commerce and Industry
• Tea Research Association (TRA)

Important Legislation:

• Tea Act, 1953

Important Concepts:

• Tea Mark
• Geographical Indication (GI) Tea
• Commodity Price Deflation
• Integrated Pest Management (IPM)

Important Current Affairs Linkages:

• Climate change and plantation agriculture.
• Agricultural export competitiveness.
• Quality certification and food safety.
• Sustainable agriculture and resilient supply chains.
• Small growers, rural livelihoods and agricultural value chains