Introduction
India became the world’s eighth largest coffee grower during 2022-2023.Indian coffee is one of the best coffees in the world owing to its high quality and pertains to be premium in the international markets. India produces two types of coffee: Arabica and Robusta. Arabica has a higher market value than Robusta coffee due to its mild aromatic flavour. Robusta coffee is used in making various blends due to its strong flavour. Robusta is a majorly manufactured coffee with a share of 72% of the total production of Indian coffee. India is considered the fifth largest producer of Robusta coffee globally. The industry provides direct employment to more than 2 million people in India. Since coffee is an export commodity for India, domestic demand and consumption do not drastically impact the prices of coffee.
India's combined Arabica and Robusta harvest is forecast to increase for the 2023-24 crop year, beginning in October, according to early estimates from the Coffee Board. The projected total crop is expected to reach 3.74 lakh tonnes, marking a 6.25% rise from the final estimate of 3.52 lakh tonnes for the 2022-23 season. The Board predicts a higher output of Arabica at 1.13 lakh tonnes, up from 1 lakh tonnes in the current season, while robusta production is anticipated to rise to 2.61 lakh tonnes from 2.52 lakh tonnes.
Coffee is produced in the southern part of India. Karnataka is the largest producer accounting for about 71% of the total coffee production in India. Kerala is the second-largest producer of coffee but accounts only for about 20% of the total production. Tamil Nadu is the third-largest producer with 5% of India’s total coffee production. Half of Tamil Nadu’s coffee is made in the Nilgiri district, a major Arabica growing region. Orissa and the north-eastern areas have a smaller proportion of production.
Export Trend
Coffee is one of the world’s most popular commodities, and as of 30th August 2024, the export of Indian coffee was valued at US$ 1.19 billion (January-August), with growth of 45% y/y over corresponding period in 2023. Higher exports are driven by higher prices and increased demand for instant coffee from countries such as Russia and Turkey. India majorly exports Robusta coffee beans, a coffee bean species with low acidity and high bitterness compared to Arabica coffee. Apart from green coffee beans, preparations of coffee (31% of which is instant coffee) also have a significant share in India’s export basket. Almost one-third of the country’s total coffee exports constitute instant coffee.
In recent years, India’s speciality coffee has become a popular product, garnering interest from global coffee enthusiasts. Speciality coffee is distinguished by careful cultivation practices, a clear origin, a routine of plucking, special processing, branding, handling, and appearance.
According to The Food and Agriculture Organization (FAO) statistics, India is the eighth largest exporter of coffee by volume. Indian coffee exports display a seasonality, with exports peaking from March to June. The country exports over 70% of its production. For the financial year ending March 2023, exports of coffee were valued at US$ 1.12 billion, around 18% growth from last year. In FY23 (until December 2023), the export of coffee stood at US$ 525.25 million. This strong growth in the export of coffee has improved realizations for coffee growers in key states.
Top Export Destinations
India exports coffee to more than 50 countries around the world. Italy, Germany, Belgium, and the Russian Federation are the largest importers of coffee from India, with an average total share of about 45%. The other coffee-importing countries are Libya, Poland, Jordan, Malaysia, the US, Slovenia, and Australia.
Italy, India’s largest export market, accounts for 20% of bean coffee exports. Europe, where people prefer comparatively more bitter and stronger flavours of the Robusta blend, makes up 70% of India’s exports. Arabica coffee blend has high demand from the Middle East region, which can be traced back to the Arabian region. In 2024 (Until August), Italy, Russia, Germany, UAE, Belgium, and Turkey, imported coffee produced in India, which were close to 52%. Also, the Government of Japan’s assurance to purchase all the coffee produced in the Manipur state will drive mass-scale coffee production in areas like Chandel, Litan, and Nongmaiching Hills, which were once regarded unsuitable for coffee production.
India exports about two-thirds of the 3.6 lakh tonnes of green coffees produced in the country.
Government Initiatives
The Government of India took the initiative to provide subsidies to the farmers of US$ 2,500-US$ 3,500 per hectare for developing coffee in the conventional regions. Additional assistance for water augmentation, equipment, marketing, and promotion is also provided under the schemes. The government also supports the non-traditional coffee-growing regions under Coffee Development Programmes (CDP). Additionally, by the national policy of tribal development, coffee cultivation is being encouraged in non-traditional areas such as Andhra Pradesh, Orissa, Maharashtra, the northeastern states, and Andaman and the Nicobar Islands. Under various export promotion initiatives, transit and freight assistance are provided to help maximize export earnings.
Export Promotion Scheme - Providing Export Incentive
The scheme aims to maximize export earnings by enhancing the market share of value-added coffees and high-value differentiated coffees in important high-value international markets. The government provides an export incentive of Rs. 2/- per kg (US$ 0.02/- per kg) for exporting high-value green coffees to high-value markets such as the USA, Canada, Japan, Australia, New Zealand, South Korea, Finland, and Norway. There is also an incentive of Rs. 3/- per kg (US$ 0.03/- per kg) for the export of value-added coffees in retail consumer packs exported as “India Brand” calculated on the green coffee utilized for preparation at the maximum rate of 2.6 kg for instant/soluble coffee and 1.19 kgs for Roasted coffee seeds and R & G Coffees.
Government Body
Coffee Board of India
The Coffee Board of India is an organization managed by the Ministry of Commerce and Industry and was established in 1942. The primary activities of the board are to promote sales and consumption in the domestic and international markets, conduct research and provide financial assistance, etc. After the discontinuation of pooling in 1996, Coffee Board served as the friend, philosopher and guide to the coffee sector covering the entire value chain. The board plans various activities which aim at the enhancement of production, productivity, and quality. It also aimed at promoting exports to achieve higher value returns for Indian coffee and to support the domestic market as well.
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No 1, Dr. B.R. Ambedkar Veedhi
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Karnataka
India
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Website: www.indiacoffee.org
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