Indian Tea Industry Since the 1990's

Abstract

Tea is made from the young leaves and leaf buds of the tea bush Camellia sinensis. Ancient Chinese and Japanese legends refer to a beverage made from an infusion of dried tea leaves. In 1833, the East India Company, after losing its legal monopoly of the tea trade between China and Britain, began to look for other sources of supply. As a result, the cultivation of tea in India began in 1834, with the planting of wild tea found growing in Assam in 1823. The tea industry has an important and special place in the Indian economy. Tea is the country's primary beverage, with almost 85% of total households in the country consuming tea. India is the world's largest producer and consumer of tea, with India accounting for 27% of the world tea production. India's expenditure on beverages and processed foods accounts for 8% of food expenditure in rural areas, and 15% in urban areas. India is also an important tea exporter, accounting for around 12-13% of world tea exports. Further, certain varieties of tea (for example Darjeeling) are grown only in India and are in great demand across the world. All Darjeeling teas possess the lightness of flavour and fine colouring that set them apart from all other teas. India's tea industry exports were estimated at Rs. 17.31 billion during FY2006, accounting for 0.4% of India's exports. In value terms, tea ranks as the fourth-largest agricultural product export item from India, with exports of around US$410 million in 2004. In terms of employment, the tea industry employs around 1.27 million people at tea plantations, and 2 million people indirectly, of which 50% are women. The last fact is particularly important when we consider that tea industry, to a large extent, drives the economies of the regions where the tea gardens are concentrated, for example Assam. Tea is the prime beverage consumed in India, and private final consumption expenditure (PFCE) on tea, coffee and cocoa aggregated Rs. 134.96 billion in FY2005, accounting for around 2% of India's PFCE on food, and 0.7% of India's PFCE. The latest available data indicates that tea accounts for 90.6% for India's consumption of stimulants (tea, coffee, and cocoa beans), followed by coffee (7.7%), and cocoa beans (1.7%). Tea plantations in India are mainly located in rural hills and backward areas of North-eastern and Southern States. Major tea growing areas of the country are concentrated in Assam, West Bengal, Tamil Nadu and Kerala. The other areas where tea is grown to a small extent are Karnataka, Tripura Himachal Pradesh, Uttaranchal, Arunachal Pradesh, Manipur, Sikkim, Nagaland, Meghalaya, Mizoram, Bihar and Orissa. Now if we boil down to the manufacturing counterpart of Indian tea industry then we will see that the sector is comparatively small. In fact, the tea as an agricultural output earns more money fot the country than as a manufactured product. But this by no means indicate that tea manufacturing is a nascent concept in India. As we will see that the only player that has crossed the seven seas to promote branded tea in form of Polypacks etc. is Tata Tea. But the fact that there are no other major house which has promoted itself as a tea manufacturing house provides enough scope to the houses themselves to improve their status. But there are some intrinsic problem which we will discuss about in the report.