Key Facts about India’s Tea Exports

India is world’s fourth largest tea exporter after China, Sri Lanka and Kenya. India exported 222 million Kg tea in 2010; but in recent years, these figures are slipping. In 2014, India exported 207.44 million kilograms of tea. Largest importers of Indian tea are Russia, UAE and Britain.

Despite being the world’s largest producer with a geographical indicator all to itself (Darjeeling Tea), India has been losing share to other aggressive players like Kenya and Sri Lanka. In 2006, India’s global market share was 14 per cent. Currently it stands ≈11%.  Kenya and Sri Lanka are able to sell the tea at cheaper price with the same quality level. This has been explained below.

India faces stiff competition from Kenya (which is world’s largest tea exporter) and Sri Lanka in tea exports. We note here that tea processing is of two kinds viz. orthodox and non-orthodox. The non-orthodox is also called CTC (crush, tear, curl). Kenya’s entire tea production is as CTC tea while Sri Lanka’s entire production is via orthodox method. Further, most of the tea prepared via orthodox method is consumed while via CTC method is exported. Thus, India’s Assam CTC Tea faces competition from Kenya while orthodox tea faces competition from Sri Lanka & Mozambique. Since qualities are similar, it’s the price and production which matter in exports.

Further, most of the tea (≈90%) exported from India is bulk tea (other is value added tea). Both bulk tea and value added tea earlier enjoyed 5% benefit by their inclusion in the Vishesh Krishi Gram Udyog Yojana. However, later bulk tea was included in the Merchandise Exports from India Scheme, whereby the export benefit was reduced to 3%. This is one factor that adversely affects the competitiveness of tea industry.