The Tea Industry in India

Overview of the Indian Tea Industry
The Indian tea industry dates back to 172 years, and occupies a significant and distinct position in the Indian economy. The tea products can be broadly segmented into crush, tear and curl (CTC), orthodox and green tea. In India, nearly 80% of all families consume tea, making it the most popular beverage in the country. Majority of tea plantations in India are located in rural hills and backward regions of the Northern, Eastern, and Southern states.  In addition, some tea varieties, for instance, Darjeeling tea, are grown only in India and are in high demand worldwide. In India, tea is traded and purchased through private selling and auctions. The majority of tea trading is conducted through auctions in six major cities: Calcutta, Guwahati, Siliguri, Cochin, Coonoor and Coimbatore. With more than 13,000 gardens and over two million workers, the Indian tea industry is one of the largest in the world. The Indian tea industry generates a sizable amount of foreign exchange and high revenue for the government. Strong geographical indications, significant investments in tea processing facilities, ongoing innovations, expanded product mix and strategic market growth contribute to Indian tea's reputation as one of the best in the world.

Production & Exports Scenario
India is one of the top tea-consuming countries in the world, with domestic consumers accounting for 80% of the country's tea production. The northern part of India is the biggest tea producer, accounting for approximately 83% of India's annual tea production in 2022, with major contributions from Assam and West Bengal. The remaining 17% of India's tea is produced in the southern region, with Tamil Nadu, Kerala and Karnataka being the top three producers. Overall, 1,344.4 million kg of tea was produced in India in FY 2021-22.

Monthwise tea production trend in 2022 (in million kgs)

Source: Teaboard

With 10% of global exports, India is one of the world's top 5 tea exporting countries. In FY 2021-22, tea exports from India were valued at US$ 750.63 million. Black tea is the most popular variety exported from India, accounting for approximately 96% of total tea exports. Other export varieties include regular tea, green tea, herbal tea, masala tea and lemon tea. Black tea, regular tea and green tea account for roughly 80%, 16% and 3.5% of the total tea exports from India, respectively. India being the world's second-largest tea producer holds a strong position in the global export market. Russia, Iran, the UAE, the US, the UK, Germany and China are some of the top countries that import tea from India. India exported US$ 61.48 million worth tea to these countries in the first quarter of FY 2022-23.

Recent trends in the Indian Tea Industry
Consumer choices have become increasingly sophisticated with the onset of globalisation. Customers have started demanding innovation and diversity in all sectors, as the variety of items available increased due to the removal of international barriers. The tea industry, which the country holds in high esteem, has also gone through a major shift, requiring firms to adapt to the most recent consumer trends in the market.

• With globalisation and the Internet acting as the main drivers for emerging new tea trends, customer preference for high-end and sophisticated tea products evidently increased. A tea lover now has access to various teas, thanks to growing e-commerce and lower international barriers.
• Over the years, tea packaging has undergone several changes. The initial goal was to prolong the shelf life of tea leaves or powder. Therefore, environmental concerns were not taken into consideration. However, customers are gradually turning away from firms that are "unfriendly" to the environment.
• During the pandemic, physical stores were forced to shut down, while online sales increased dramatically. Several direct-to-consumer (D2C) tea brands sprouted during the pandemic, and their "online-only" business models saw impressive growth.

Government Initiatives
The Tea Board of India, established as a statutory body under the Ministry of Commerce, is in charge of developing and promoting the tea industry in India. The Tea Board of India’s vision and mission is to make the country a leading producer of tea across the globe. In this regard, the Tea Board of India established several programmes and schemes to foster the development and growth of the tea industry.

Some of the major schemes and promotional activities undertaken by the Tea Board of India are mentioned as follows:

• Tea Development and Promotion Scheme: This scheme was launched on November 11, 2021, to increase the production, productivity and quality of Indian tea products to remain competitive in international markets. It also focuses on the growth of small tea growers, their collectivisation for moving up the value chain, value addition in their teas for better price realisation and increasing their share in export markets.
• Capacity building workshop on specialised tea production and packaging and marketing of different types of tea: On June 14-15, 2019, the Tea Board of India held a capacity-building workshop on specialised tea production and packaging and marketing of several types of tea in Borhat, Assam, to spread knowledge on the cutting-edge technology for producing various types of speciality tea, handling of the produce, tea marketing and trading and promotion for Assam tea.
• Orientation programme for small tea growers and manufacturers on the export of tea: To encourage the export of handcrafted and speciality teas produced by small tea growers, the North Eastern Zonal Office of the Tea Board in Guwahati hosted a day-long "Orientation workshop for small tea grower manufacturers on the export of tea" at the Guwahati Tea Auction Centre (GTAC). The event was attended by more than 70 small tea growers and manufacturers from various regions of the North East.

Road Ahead
The primary driving force behind the sector is the widespread consumption of tea across all socioeconomic strata in India. The country's rapid economic development and rising disposable income of the middle class are also accelerating the industry's growth. The rise in demand for packaged tea in urban and rural areas, where there is less chance of adulteration and simpler storage, is also helping the Indian tea sector expand rapidly.

In the next few years, the tea industry’s growth is anticipated to be driven by the rising popularity of cafes and lounges serving different beverage varieties. The industry's distribution networks, which include supermarkets and neighbourhood "Kirana" stores, will also aid in the industry's growth. The RTD (ready to deliver) category has the potential to grow favourably, as consumers explore more convenient foods and beverages as a result of busier lifestyles and growing workforce participation. An increase in packaging and flavour innovations will also fuel the market in the future.