Indian Tea: Robust Growth Amid Rising Challenges

Abstract

Tea [ Camellia sinensis  (L.) O. Kuntze is most consumed drink in the world makes a vital contribution to the economy of the producing countries. India is the second largest tea producer and one of the world’s largest consumers of tea. The consumption rate in India has increased at a CAGR of 2.95%. Indian production has increased at a CAGR of 4.17% between 2010 to 2018 but slight falling trend in production have been noticed in 2018 and 2019. Black tea occupied major share and now-a-days expansion of green, herbal and flavor teas has been seen. A comparative growth of tea export, auction prices, price realization etc. of India and other major producing countries are presented. The COVID-19 pandemic blow comes just at a time when unit prices of Indian tea were on the rise for its better quality, but lockdowns severely affected the Indian auction price till 22nd week of 2020. The average monthly auction prices were gradually increased from INR 188.77/kg in June to INR 260.63 in August and has shown declining trends fetching INR 252.87 in September and INR 206.26/kg in October 2020. The auction prices were 2.5 times more since lockdown, which have impacted the gross margins in the September quarter. The price rise would certainly provide some relief to the Indian tea industry which has been struggled with consistent increasing production costs since 2014. The lockdown effect on production, market and export of Indian tea was comparatively severe than other major tea producing countries. Indian export target of 300 million kilograms (mkg) was set for 2020 but target was fell both in volume and value terms between January and June 2020 and target expected to be lower around 210 mkg. Though gradual increment of revenue has been observed but the year-on-year revenue growth rate of Indian tea industry has reduced significantly. In the present article growth of tea production, consumption, tea market, auction prices, revenue earning and impact of COVID-19 on tea prices from the global perspective are discussed. Since last few years recurring problems with low prices and high labour costs, unusual weather is intensifying in the Indian tea industry are also highlighted.