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BREW IS NO MORE HOT- Indian Tea Industry In Trouble

The tea industry in India came into existence with the rise of the British East India Company
in India and by early 20th century, India became one of the world leaders in the tea business.
Parallel to the global market, the domestic demand for tea too grew rapidly. The Indian tea
industry maintained its glory days for over a century, surpassing production in China, where
it was being grown much earlier. However, Indias status as a leader began to decline and by
late 1970s China surpassed India in total annual production. Since then, despite maintaining
its position among the leading tea producers and exporters in the world, and several
advancements in areas of tea production, processing, as well as the opening of new markets,
the Indian tea industry has not been able to relive its glory days as the world leader. Over the
years, the Indian tea market has remained more or less flat while the competition has
increased many folds with the emergence of new leaders like Sri Lanka and Kenya. At
present the Indian tea industry is under pressure, which is bound to increase in coming days.
There are several areas in which Indian tea industry is feeling the heat. The main problem
areas of the industry according to an analysis in the Insights on India are Agricultural and
infrastructural issues, Quality related issues, Labour Issues and Market stagnation.
Agricultural issues- This includes the issues like the increasing in some old age tea bushes
in the estates. Due to non-availability of required equipment or the limited labour force the
annual maintenance operations of bushes like the annual pruning, digging, soil drenching and
bush rejuvenation operations have not been carried in some states. As a result, the forests are
unable to get sufficient fresh flush of leaves, which affects the quantity with the quality of the
leaves plucked which in turn deteriorates the quality of the tea produced after processing,
with a lower concentration of active ingredients.
The infrastructural issues include the use of old processing facilities like the firewood
operated dryers, congested work areas, old and inefficient CTC (cutting, twisting,
curling)machine and grading machine. These not only puts a constraint on the processing
capacity but also makes the operation weather dependent, with the limited availability of dry
firewood on the hills. This becomes, even more, important in light of the government
legislation that prevents cutting down of trees on hills.
Quality issues- The Indian tea has been famous throughout the world for its quality. In fact,
India is still the only producer of some of the highly regarded tea varieties in the world, like

the Darjeeling tea and Assam tea. However due to poor maintenance of estates, inefficient
and old processing equipment maintaining the high quality especially when new competitors
are growing fast in the market is a significant challenge. With the growing environmental and
health concern, especially among the international customers, there has been issues on the
quality aspects such as MRL (Minimum Residue Level) of pesticides and other plant
protection or yield enhancing chemicals. In entire past shipments have been rejected, for not
complying to the international standards, causing great financial loss and bringing loss of
market reputation to Indian producers.
Labour Issues- Tea industry being a highly labour intensive industry, the availability of
proper labour force influences to a large extent the total production and processing quantity.
However, the wages given to the labourers working in tea plantation has traditionally been
low. The main reason being the hiring of mainly female labourers for picking leaves in the
estates, who are paid less. The working conditions are poor and work hours are long, often
exceeding 12-13 hours. Apart from this, despite working for several years, they do not get
any social security. Over the time, these factors have forced the plantation workers to leave
the plantations, and migrate to the lower plains in search of other jobs, which are paying
better. The tea estates are facing serious labour shortage.
Market stagnation- For a long time the Indian tea market has been more or less flat, with a
very little growth. India still exports a majority of its tea to Europe, and the middle eastern
countries,(Exhibit 1). For a long time, the Indian tea producers have failed to find new
markets. With the growing competition, the unavailability of new markets is cutting in Indias
market share.
Adding to the misery, the recent report published by Green Peace, claiming the presence of
35 hazardous pesticides in Indian Tea has resulted in significant negative publicity reducing
global competitiveness for Indian Tea.
Despite facing some challenges, the Indian tea has its dedicated customer base that is keeping
India among the leading exporters. However, its high time that some changes are brought in,
to sustain the increasing pressure.
Its time that a standard cultivation practise is formulated and adopted. The rejuvenation
operations should be made mandatory to be carried out at appropriate time and season. This
in large can solve the issues related with the Quality. The processing equipment should be

modernised with the adoption of the electric driers, which will not only improve the output
but also the efficiency, which will ultimately help in reduction of processing cost.
To take care of the quality issues, the Tea Board must adopt stringent standards even for the
domestic market, which are in compliance with the standards of the international regulatory
authorities. Adopting quality certifications will increase the credibility in both the domestic
as well as the international market.
The government must ensure that the labour laws, like the equal pay for equal work, are duly
followed in the tea estates. The estate owners must be forced to provide better infrastructural
facilities like school, health-care centres, etc. and give importance to the safety of workers.
Along with maintaining sales in traditional European and Middle East markets, Indian
producers need to expand to new markets like Kazakhstan, Russia, U.S, Iran, Egypt and Chile
to maintain their position as a leader in the industry.
Tea commands the premium image in European society; on the other hand, it is the most
common choice of beverage served to the guest as well as for domestic consumption in India.
Also the growing health consciousness among the people in recent times has made a
favourable shift in the demand for tea, and the number of tea consumers is increasing.
Whether the Indian tea industry can meet the challenge or not, only the time would say.