Indian Tea Sector – Scope for Global Opportunities

Indian Tea Sector Latest News

• India’s tea sector is in the news after experts highlighted its vast potential to become a tea superpower by focusing on quality, new export markets, and boosting domestic consumption.

Introduction

• India’s tea sector holds a unique position in the global economy, being one of the world’s largest producers and consumers of tea. 
• With tea deeply ingrained in the country’s cultural fabric and economy, the industry plays a vital role in rural livelihoods, exports, and domestic consumption. 
• Recent assessments by global experts point toward vast untapped potential, particularly in improving quality standards, exploring emerging markets, and enhancing per capita consumption within India.

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The Indian Tea Sector: An Overview

• India is the second-largest producer and consumer of tea and the third-largest exporter globally. 
• Tea cultivation spans across Assam, West Bengal, Kerala, and Tamil Nadu, providing employment to over 1.2 million workers directly and sustaining millions more indirectly.
• Production: In 2024, India produced 1.303 billion kg of tea, contributing significantly to the global production of 7.074 billion kg.
• Consumption: Domestic consumption stood at 1.22 billion kg, highlighting India’s centrality in balancing global supply and demand.
• Exports: India exported 255 million kg, valued at nearly $800 million, positioning itself after Kenya, China, and Sri Lanka.

Challenges in the Sector

• Low realisation per export unit compared to Sri Lanka and Kenya due to quality inconsistencies.
• Stagnant domestic per capita consumption of 840 grams per year, compared with Turkey’s 3 kg per year, the highest globally.
• Pressure from climate change, ageing tea bushes, and rising labour costs is affecting productivity.

Recent Steps by the Government and Industry

• Initiatives under the Tea Development Board to modernise tea estates.
• Promotional efforts through the India Tea brand to improve recognition in global markets.
• Incentives for organic and speciality tea production to capture premium markets.

News Summary

• At the India International Tea Convention in Kochi, experts underscored India’s untapped potential in the global tea trade.
• Focus on Quality: India must improve quality standards to secure better prices in international markets.
• Exploring New Markets: India needs to expand exports beyond traditional buyers to newer markets such as South America and Africa, where demand is rising.
• Domestic Market Potential: Indian consumers are increasingly willing to pay for quality. The participants noted that if per capita consumption rises even to 1 kg annually, India could absorb its entire production domestically.
• Comparative Position: While Kenya exports almost its entire tea output and Sri Lanka earns $1.4 billion from 245 million kg exports, India earns significantly less despite exporting a higher volume.
• The experts concluded that with its scale, heritage, and growing consumer sophistication, India has all the “ingredients to become a tea superpower.”

Conclusion

• The Indian tea sector stands at a critical juncture. While it enjoys the advantage of scale and deep-rooted cultural demand, the focus must shift toward quality enhancement, brand positioning, and diversification into new global markets. 
• Rising domestic consumer aspirations also present opportunities to boost per capita consumption. 
• If these challenges are addressed, India has the potential to transform from being a large producer into a true global tea superpower.

Source: TH