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Tea industry in India

I read an article stating India’s tea production may not be able to reach the 1 billion kg mark. This lead me to reading further in to the dynamics of the tea industry in India.

I have tried to put together some pieces of information on the Indian Tea Industry.

India produces nearly one-fourth of the total tea produced in the world. The tea industry occupies a place of considerable importance in the Indian economy.

Domestic demand accounts for over 85% of the country’s tea output and since tea imports are permitted only for re-export, India’s share of the global tea trade is on the lower side. Nevertheless, exports have a critical role to play in maintaining the demand-supply balance in the domestic market.

North India (which includes Assam and West Bengal) alone accounts for around 75% of India’s total tea production, of which 85-90% is consumed in the domestic market. The balance, much of it of high quality, is exported. Tea is produced in the states of Tamil Nadu, Kerala and Karnataka in South India.

Tea is among the most labour-intensive of all plantation crops. On an average, around 65% of the cost of production is incurred on labour.

Tea is a seasonal industry. January-mid March are the lean months for the tea production in India’s northern belt. Production begins from mind-March to May (known as the first flush). Post rains, tea production peaks during July-September period (known as the second flush). Around 60% of the India’s tea output is produced during the second flush. Contrary to north India, south India witnesses rains around November-December which results in higher output in south during the March quarter. Hence, the quarter ending September is the best quarter while the quarter ending March is a negative one.

Tea trading in the domestic market is done in two ways- Auction and Private Selling. Bulk trading is done through the auctions held across various centres.

Unlike most other tea producing and exporting countries, India has dual manufacturing base. India produces both CTC and Orthodox teas in addition to green tea. The weightage lies with the former due to domestic consumers’ preference. Orthodox tea production is balanced basically with the export demand. Production of green tea in India is small. The competitors to India in tea export are Sri Lanka, Kenya, China, Indonesia and Vietnam.

China is the major producer of green tea while Sri Lanka and Indonesia are producing mainly orthodox varieties of tea. Kenya is basically a CTC tea producing country. While India is facing competition from Sri Lanka and Indonesia with regard to export of orthodox teas and from China with regard to green tea export, it is facing competition from Kenya and from other African countries in exporting CTC teas.

Paradigm shift from CTC to Orthodox

India, which predominantly produces the CTC variety of tea, is likely to see a paradigm shift in production towards the orthodox variety, which is typically exported. With a rise in demand for orthodox tea emanating from Russian and Middle Eastern countries entailing higher realisations, a foreseeable shift can be envisaged, going forward. Likewise, in an attempt to garner a greater share of the global market, the government of India is offering a subsidy of Rs 3-5 per kg as an incentive scheme to enhance the production of orthodox tea which commands a premium price in contrast to that of the CTC variety.

Tea Processing

Tea manufacture is the process of converting young fresh tea shoots into dry black tea. This involves a number of processes from plucking to packing. At the plucking stage, only the top leaf tips are picked every 6 to 7 days. The tip leaves are younger and finer which produce a better quality tea. The fresh green leaves now need to have the moisture removed from them. This is done by blowing air through the leaves for up to 14 hours, leaving a soft and pliable leaf. There are then two ways of treating the tea. Tea which is to be used as loose leaf, will normally be rolled gently to create a twisted appearance.

In contrast, tea which is to be used for tea bags, is shredded and crushed to produce a small granular product. Rolling and crushing the leaves, results in the rupturing of the leaf cells which allows oxidation to occur. This gives the tea its distinctive black colour and flavour. The tea is then dried at high temperatures to achieve the correct taste. When it has been dried, the leaf tea is of differing sizes and will also contain pieces of fibre and stalk. At this point it is processed to remove pieces of stalk which will then leave tea suitable to be sold as loose tea. The tea is passed through varying sizes of meshes to sort it and has to be passed through very fine ones in order to produce tea fine enough for tea bag production. This process of sorting is a harsh one and it can cause the tea to lose some of its flavour. That is why loose tea usually has a better flavour than the tea in a tea bag.

For Tea Statistics: click here

Reference: http://www.teaindustry.com, http://www.teaboard.gov.in/

 Can Read: Insights by Mr. Kamal Baheti, McLeod Russel India Ltd

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Categories: Agriculture, Tea
  1. July 13, 2010 at 6:18 pm

    I want the list of tea industries in north east india

  2. padmashree
    June 27, 2012 at 5:56 am

    I want tea industry in India. i want to become a tea broker so,help me

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