Financial Crisis in Tea Industry: Says Indian Tea Association

Context: 

• According to the paper “Tea Scenario 2023” of Indian Tea Association (ITA),  tea industry is passing through a phase of acute financial crisis with prices not keeping pace with the rising costs of production.

Challenges in the Tea Industry

• Tea prices increased at a compounded annual growth rate (CAGR) of around 4% over the last decade, costs of vital inputs like coal and gas among others grew at a CAGR of 9% to 15% during the same period.
• The exponential increase in production resulted in surplus teas remaining in the system as domestic consumption and exports have not grown to absorb it. 
• The tea industry’s export scenario remains grim as shipments to Iran are uncertain. 
  • The Iran market constitutes nearly 20% of total tea exports from India. 
• The tea industry has urged the government to consider enhancing RoDTEP (remission of duties or taxes on export products) incentive cap for high quality orthodox and Darjeeling teas.

Tea Board of India

• Set Up: Under section 4 of the Tea Act 1953 it was constituted on 1st April 1954. 
• Organisation: Tea Board functions as a statutory body of the Central Government under the Ministry of Commerce. 
  • Tea Board of India is constituted of 31 members (including Chairman).
  • The Board of India is reconstituted every three years.

Geographical Conditions for Tea Production

• Temperature: It requires a hot and wet climate. The ideal temperature for the growth of tea bushes and leaves varies between 20°C to 30°C. 
• Rainfall: It requires a good amount of rainfall ranging between 150-300 cm and the annual rainfall should be well distributed throughout the year. 

• Soil: Tea bush grows well in well drained, deep, friable loamy soil.  
• Distribution: 
  • Assam: It is the leading producer that accounts for more than 50% of tea production of India. Tea producing areas of Assam are the hill slopes bordering the Brahmaputra and Surma valleys. 
  • West Bengal: Tea is mostly grown in the districts of Darjeeling, Siliguri, Jalpaiguri and Cooch Bihar districts. 
  • Tamil Nadu: Tea growing areas are mostly restricted to Nilgiri hills. 

 News Source: Business Standard