By Ashis Biswas
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 $680 million in foreign exchange. The year before, in 2020, altogether 210 million kgs were sold abroad. Routine cultivation and work preparatory to production had suffered in 2021 because of the Covid 19 pandemic,
In North East Indian plantations the unusually dry summers and reducing 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 fertilizers uncertain and certain pesticides costlier.
The use of pesticides and chemicals to ensure the survival of plants and protest leaves from bugs etc, in the context of an already dropping production, has brought fresh problems for the tea exports. Several Asian countries have in recent times refused to buy certain varieties of Indian tea, objecting to the presence of higher than internationally permissible limits of chemicals in the crop. Worse, even some bulk domestic consumers stopped buying a few varieties!
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 round 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 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 have already written to the Union Commerce Ministry and the West Bengal Government, explaining their present difficulties and urging upon 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 in 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 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.
A recent study by analysts show that these days it costs a plantation owner around Rs 21 to produce one kilo of average quality tea., as input prices have risen over the years. Unfortunately, thanks to the invasion of the Indian market by Nepali producers and the absence of adequate support/facilities for the industry by concerned state/Central governments, few producers are in a position where on average they can expect to command only a price level of Rs 16/17 per kilo of tea they produce.
A major evidence that the crisis of the industry is systemic is the closure of several major houses over the years and the decision of some former plantation owners including a few big names, to shift their investments to other sectors of the economy.
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. (IPA Service)
Narendra Modi Government Is Acting Bizarre On The Issue Of Giving “Freebies” 