Indian Tea Industry Overview
Indian Tea Industry Overview
1. Introduction
Tea plantation in India has been contributing significantly towards the socio economic development
of the people of the tea growing regions of the country. Tea industry contributes substantially towards
the national and state economy by way of enriching the foreign exchange reservoir and State
exchequer besides employment. Today the major tea growing states are Assam, West Bengal, Tripura,
Tamil Nadu, Kerala and Karnataka. Himachal Pradesh and Uttaranchal are also traditional tea growing
states, albeit to a less significant extent. Besides, tea plantation has come up recently in states like
Arunachal Pradesh, Manipur, Sikkim, Nagaland, Meghalaya, Bihar, Orissa, etc. Mizoram also has the
potential for development of commercial tea plantation.
2. Indian scenario
India is one of the major tea growing country in the world, producing about 30% of the world tea
production annually. The other leading producers are China, Kenya, Sri Lanka, Turkey and Vietnam.By
building on a proud legacy of enterprise that spanned nearly two and a half centuries, India has acquired an
exalted status on the global tea map. In India, it is grown in an area of approximately six lakh hectare. The
country is the second largest tea producer in the world with production of 1,197.18 million kg in 2014-15.
Interestingly, India is also the world's largest consumer of black tea with the domestic market consuming 911
million kg of tea during 2013-14. India is ranked fourth in terms of tea exports, which reached 197.81 million kg
during 2014-15 and were valued at US$ 619.96 million. The area and production under tea cultivation in major
tea producing areas of the country is given in Table 1
Table 1
Area and production under tea plantation area in major tea producing states of the country- 2013-14
State / Districts Area under % of total Production % of total
tea area (Million kg) Production
(in ‘000 ha)
Assam Valley 270.92 48.04% 581.03 48.07%
Cachar 33.48 5.94% 48.02 3.97%
Total Assam 304.40 53.97% 629.05 52.04%
Darjeeling 17.82 3.16% 8.91 0.74%
Dooars 72.92 12.93% 177.85 14.71%
Terai 49.70 8.81% 125.34 10.37%
Total West Bengal 140.44 24.90% 312.10 25.82%
Other States(Includes Tripura, 12.29 2.18% 23.92 1.98%
Uttarakhand, Bihar, Manipur,Sikkim,
Arunachal Pradesh, Himachal
Pradesh,Nagaland, Meghalaya, Mizoram
and Orissa)
Sub Total 457.13 81.05% 965.07 79.84%
Tamil Nadu 69.62 12.34% 174.71 14.45%
Kerala 35.01 6.21% 63.48 5.25%
Karnataka 2.22 0.39% 5.52 0.46%
Sub Total 106.85 18.95% 243.71 20.16%
ALL INDIA TOTAL 563.98 100.00% 1208.78 100.00%
(Source: Tea Board of India)
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It may be observed that about 81% of the country's total area under tea plantation is located in North
India. Out of the total, 54% is existing in Assam and 23% in West Bengal.
In general, the productivity in North is less than in South. It is primarily due to the comparatively
coarser standard of plucking resorted to in South India. It is reflected in the quality and price realization
factors also. The overall productivity has remained almost static during the last three years.
3. Tea Export
The top export markets in volume terms for 2014-15 were Russian Federation (39.14 million kg), UK (18.58
million kg) and Iran (17.53 million kg). In terms of value, the top export markets were Russian Federation (US$
94.43 million), Iran (US$ 75.73 million) and UK (US$ 57.74 million). All varieties of tea are produced by India.
While,’Crush,Tear and Curl(CTC) accounts for around 89 per cent of the production, orthodox/green and instant
tea account for the remaining 11 per cent.
Kangra tea is famous worldwide for its rich aroma, colour and taste. It’s a tea like no other. Kangra tea
is frequently compared to Darjeeling tea to get a frame of reference. But, it’s different, and Kangra
fully deserves to be recognized as a distinct origin. Uniquely, it’s probably the only tea region in India
that comprises exclusively China, or China-hybrid, tea bushes. There was a time when tea from this
part of Himachal Pradesh ranked among the best in the world. In 1883, the Gazetteer of the Kangra
District noted that tea produced in the region was “probably superior to that produced in any other
part of India”.
History of Kangra Tea in Himachal Pradesh traces back to nineteenth century after Dr William Jameson,
the then Superintendent of the Botanical Gardens in Peshawar in the North West Provinces, on a visit
in 1849, declared that Kangra district was right for tea cultivation. He was the man who brought the
tea plant to Kangra. In 1849, he planted Chinese hybrid shrubs at three places in the valley: Kangra
town (altitude 750m); Nagrota (870m) and Bhawarna (960m). Kangra town was too warm and dry, but
the plants did well at the other two places. This was all the encouragement the local administration
needed. Three years later saplings were brought in from China and the first commercial tea plantation
as a tea estate was set upat Holta near Palampur, at an altitude of 1,260 m.In the next seven years, a
number of private planters, both locals and Europeans, got into the business. They set up 19 tea
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estates in the region, covering a total of 2,635 acres. In another 15 years, the area under tea had
increased to 7,994 acres, and by the end of the 19thcentury, it stood at 10,000 acres and produced
almost 1,000 tonnes of tea annually. At least 80% of these plantations were around Palampur, which
had a congenial climate and abundant water. In the span of half a century, Kangra had entrenched
itself on the world’s tea map. Its black and green teas were travelling to Afghanistan, Russia and
Central Asia via Amritsar. On the other side, it could hold its own among teas from Assam and
Darjeeling in the Kolkata market, from where they were shipped to Europe and America.
The second half of the 19thcentury saw a small, but thriving tea industry take shape in Kangra. In it’s
hey day, Kangra tea was of the choice in Afghanistan and Central Asia, and even reached Europe and
USA.In the 1890s, almost 10,000 acres in the Kangra valley was covered by tea plantations. In 1892,
the Kangra Valley Tea Company Ltd sold more than 20,000kg of tea in London. Between 1886 and
1895, Kangra’s tea won gold and silver medals for quality in London and Amsterdam respectively.
Kangra tea fell off the tea map of India after the devastating earthquake in 1905 when European
planters left the region, handing over their estates to their workers or local traders. The locals who
took over the abandoned estates were unable to meet the same standards of quality and productivity,
and Kangra’s tea started losing ground. In 1980, Kangra’s estates produced only 132kg of tea per
hectare, the lowest in the country, and well below the 284kg that the European planters averaged in
1892.Today, most of the tea growers have small land holdings.Nearly half of the area under tea
plantation has been neglected or abandoned due to low productivity and low prices of tea.
But, with the efforts of all the stakeholders especially State Government, Centre Government and Tea
Board of India, the past one decade resulted in increase of acreage, production and improvement in
quality of tea, thus coupled with higher margins for tea growers. The estates are now a sight to behold.
In 2006, Kangra also won recognition as a “geographic indicator” for tea (like Champagne is for wine
and Chanderi is for cloth) and has its own unique brand image of Kangra Tea “Two leaves and a bud”.
Why significant? Because two leaves and a bud are ideal for plucking. When two leaves exist along
with a bud, they are small, tender and pale green and emanate rich flavour and are ideal for rolling.
So, now it is known that all tea leaves are not equal and the pluckers are after a certain kind of leaf
combination. Flavour is the unique selling proposition of Kangra tea. The Chinese hybrid variety grown
here produces a very pale liquor, which is the reason why Kangra does not produce any CTC (crushed,
turned, curled) tea—the staple tea of India.
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6. Kangra Tea Processing &Production
As per the data from Tea Board as on 31.03.2015, there are 67 tea processing factories registered with
the Tea Board. However, there are only 39 factories which exist now, but processing is being done in
very few factories. The most important ones among these include Mann Tea Estate Factory, Wah Tea
estate factory, Mansimbal Tea Estate Factory, Khalet Tea Estate factory,etc. Out of these, 4 tea
factories are in cooperative fold viz. Palampur Cooperative Tea factory, Sidhbari Cooperative Tea
Factory, Beed Cooperative Tea Factory and Baijnath Cooperative Tea Factory. Cooperative Societies
were expected to perform better but it could not happen that way and now 3 of these cooperatives
factories except Palampur Cooperative Tea factory have been leased out to the private sector. Tea
production over last two decades in the State is given in Table – 2.
Table – 2
Tea Production over last two Decades (1994-95 to 2004-05 )
The Tea Board has initiated certain steps for restoring Kangra Tea’s lost glory after analysing the
reasons for downturn in the Kangra tea industry. It has prepared a plan to rejuvenate the Kangra tea
industry by promoting tea planters in the area. To implement its plans, the Tea Board has
strengthened its office at Palampur with four new posts, including deputy director, factory advisor,
and two development officers. The Centre had sanctioned a project of Rs. 15 lakh for the state
agriculture department to conduct a baseline survey of the abandoned area under tea cultivation and
another research project for revival of the Kangra tea and its organic farming to the CSK Himachal
Pradesh Krishi Vishavidyalya, Palampur. The survey identified nearly 4500 hectare of non-conventional
tea producing area that has potential for tea production. Tea Board is preparing plans keeping in view
this area in addition to nearly 1000 hectare of organized tea gardens and nearly half of 2312 hectare
ill maintained and abandoned tea gardens in Himachal. Thus, Tea Board project envisages
enhancement in production up to ten times from the current production figures of nearly 1 million
Kgs per year to 10 million kgs over the next decade in a phased manner. It will collaborate with
Institute of Himalayan Bio resources and Technology, Palampur and CSK Himachal Pradesh Krishi
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Vishavidyalya, Palampur for technical expertise to explore and implement new schemes for tea
planters.
In Indian scenario, the contribution of STGs in the production of tea has been on an increasing trend
from 11% in 1994 to 30 % in 2013. Their numbers have swelled from less than a lakh in 1995 to 1.7
lakh in 2013. Even as their numbers swell, scattered nature, lack of organizing and bargaining capacity,
non-availability of working capital for maintenance & management of tea gardens, non-availability of
nearby market, their dependence on exploitative trade channels, low levels of technical knowledge
and business skills, lack of awareness about government support and abysmal representation at local
and national level become serious impediments in their healthy growth. Unfair price of green adds to
their vulnerability and affects their access to health, education and other essential services.
In order to promote tea sector, Tea Board is implementing a comprehensive scheme in the country.
However, there is no Himachal Pradesh or state specific scheme or components under this scheme.
The benefits are available equally for all beneficiaries across the country. The scheme has seven major
components covering broad areas of Tea Board’s operation: Component-1: Plantation Development;
Component-2: Quality Up gradation and Product Diversification including Orthodox Production;
Component -3: Market Promotion – Domestic and International; Component -4: Research and
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Development; Component -5: Human Resource development; Component -6: Development of Small
Growers and Component -7: National Programme for Tea Regulation.
The above components primarily comprises extending subsidy/ financial incentives/ grant in aid for
various activities carried out by different stakeholders for improving the Production, Productivity and
Quality of Tea in India and Promotion of Indian Tea in the international market and Research and
Development. Out of these, for plantation sector is Component- 1: Plantation Development is the
most significant for tea growers. There are 5 sub-components under this component viz. Replantation,
Replacement planting; Rejuvenation of old tea bushes; New Planting; Organic Tea; Irrigation facilities
and Field Mechanization. The rate of subsidy varies from 25 % in case of new planting to 30 % in
replanting and rejuvenation of old plantations. Tea growers may visit www.teaboard.gov.in for more
details on these schemes.
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the existing tea growers have abandoned their tea gardens. That is why, out of 2312 ha that
is under tea, only 1150 ha area is active and remaining area has been abandoned and there is
no commercial tea production from this area.
9.1Agro-climatic conditions
Well distributed rainfall ranging around 2000 mm to 5000 mm is considered suitable for successful tea
plantation. The monthly average maximum temperature ranging between 280Cand 320C during April
to September, with occasional rise upto 360C -370 C is good for the plantation.The Kangra valley,
blessed by the twin advantages of a temperature range of 130C-35°C during the cropping season of
March-October and an annual precipitation of 2300–2500mm of well distributed rainfall, is ideal for
tea cultivation tea. These unique topographical and climatic conditions must, obviously, have been
the deciding factors way back in the 1850s when the Kangra Valley was opened up to tea planting. As
tea plants generally prefers flat and slightly undulating lands, Kangra valley with undulating
topography and slightly acidic soils is suited for commercial tea plantation.
Generally, sandy loam to silty loam type of soil with pH range of 4.5 - 5.5 is ideal for growing tea. Soil
should possess a minimum 1% of organic carbon, 1-2% of organic matter, 35ppm of P2O5 and 80 ppm
of K2O for successful establishment of tea. Tea plantation being a long term investment it is advisable
that before going for new plantations, soils may be tested in soil testing laboratory of the State
Agriculture Department at Palampur. As per Tea Board norms, soil testing is mandatory for the
planters to avail subsidy from Tea Board. Due care must be taken to collect the soil samples most
methodically to represent the section properly. Before collecting the soil samples, necessary advice
may be obtained from the soil testing laboratory in this regard. Based on the soil testing results, the
necessary prescriptions by soil expert for improving the soil conditions, if any, may be followed to
ensure the success of tea plantation.
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9.4 Source of planting materials
The sources of planting material must be very reliable. The quality of the planting material will
primarily decide the health of the plants and to a great extent the style of bush formation. The
beneficiary may develop his own nursery or he may obtain the materials either from Tea nursery of
Tea Wing of HP Agriculture Department, Palampur or approach Tea Board, Palampur.
9.7 Drainage
For laying out drains, bunds, culverts, etc., topographical planning is helpful. The drain design, i.e.
depth, width, spacing, etc. would be governed by the topography, soil type, soil structure, etc.
Waterlogging reduces the crop besides causing root diseases. Existing drains should be renovated as
a routine practice to keep them functional. Regular cleaning and desilting of drains to 90cm depth is
desirable. Protection of drain-edges with vegetation is more important than batter or depth.
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9.10 Planting
Only well grown robust plants of 45 to 60 cm height with basal stem diameter of 0.5 – 0.8 cm and 8-
10 leaves should be planted in the main field. Results from the use of planting materials raised in
sleeves are always better than those raised in beds.The polybags should be removed from saplings
and it should be planted in such a manner that collar of the saplings should be above the ground level.
The soil around the sapling should be pressed hard. It needs to be ensured that no depressions are
left around the plants. Mulching should be done immediately after planting to avoid mortalities.
As shade is very important in tea plantation, shade trees need to be planted alongwith planting of tea
saplings. In the initial years shade can be provided through planting of suitable nurse crops. A
leguminous crop is very much suitable in the first three years of planting. Green crops like Crotolaria
are useful in young tea areas and their seeds should be sown simultaneously with tea in lines. A
spacing of 3.6m X 3.6m is suggested for the temporary shade trees. When the permanent shade trees
establish well, the temporary shade trees need to be removed.As a routine, the poorly shaded areas
should be renovated by planting new shade trees.Alongwith this, permanent shade should also be
planted. The most suitable shade trees in Kangra valley are Albizzia lebbeck, Albizzia procera,
Jacarandamimosifolia, etc.). The shade trees species should be planted at a spacing of about 6 m x 6
m in site exposed to southern aspect and 10 m X 10 m in sites exposed to northern aspects. Later on
depending upon the canopy development, these shade trees may be thinned depending on the
canopy size at maturity.
9.12 Mulching
Following planting, the area is thoroughly mulched preferably with grass, water hyacinth, citronella
grass, etc. If paddy straw is used, 20 kg N/ha in the form of urea is to be sprayed. Mulching materials
may be collected from nearby forests also. Mulching helps conservation of soil moisture, prevents
erosion, reduces weed growth and adds organic matter to the soil.
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8th year Light Prune 5-6cm above last cut across mark and tip over 25cm.
Note- # Year of planting is considered as first year in this model scheme (in some cases year of planting is considered as 0 year)
Thereafter, 4 to 5 year pruning cycle may be followed depending on the requirements and growth
pattern. Considering the factors such as the growth and region of growing tea and climatic conditions
of the region, the sequence and type of different pruning operations stated above can be modified.
Debudding by nipping/removing all the growing buds from the main stem/growing shoots above 25cm
from the ground. Once the branches below this height are developed, the top debudded portion is
removed by clean pruning using a 7.5cm (3") pruning knife.
9.15 Pruning
In general in Kangra region4 to 5 year pruning cycle is followed. A 4-year cycle for vigorous tea and 5-
year cycle for average tea may be followed. While forming a sound pruning programme, various
factors need to be analyzed. These include: stage of growth of tea crop, crop distribution / canopy
density, annual fluctuations, incidence of pests and diseases, frame height, availability of labour, type
of tea to be manufactured, availability of water for irrigation andShade tree status.
Normally, a 4-year pruning cycle of LP-UP-DS/ MS-LS-UP may be adopted in this area. The suitable
time for light prune and deep skiff is between December and mid-January and that of medium skiff
between January and early February.The plucking interval should be maintained between 7-8 days for
quality.
9.16 Manuring
(a) Young tea manuring: (Manure YTD 2:1:3 mixture)
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Year of planting/ 1st year 5g YTD / plants, 3-4 times at 6-8 weeks intervals
2nd year 10g YTD/plant, 3-4 times at 6-8 weeks intervals
3rd year onwards 20g YTD/plant, 3-5 times at 6-8 weeks intervals
4th year YTD Broad cast @130-150 kg N/ha
In addition to the normal, NPK fertilization, micronutrients like Zn, Mg, B etc., may also be applied as
foliar spray for correcting the deficiencies, if any observed in the field.
9.19 Irrigation
Since Kangra valley where tea plantations are being recommended receives adequate rainfall both in
monsoon and winter seasons, not much irrigation is required. However, in the initial year of
plantation, 2-3 critical irrigation, if required in rain shadow area or rain deficit period, may be provided.
9.20 Fencing
Fencing of tea plantation is must to protect the tea plants from stray and wild animals especially in
the initial years. Depending on the perimeter of the plot of land, the length of fencing required would
vary. In order to reduce the cost, fencing with barbed wire with locally available wooden posts,
preferably live, may be erected.
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10. Extension & Advisory Services
The small tea growers may avail necessary technical guidance from institutes like Tea Board IHBT,
CSKHPKVV, ToT, Tea Wing, Department of Agriculture, all having offices at Palampur, The beneficiaries
may also get necessary technical assistance from the owners of the bigger tea estates located nearby.
The planters who purchase the plucked leaf from the beneficiaries are also expected to provide
necessary technical guidance.
The unit cost for a new plantation covering one hectare area has been arrived at Rs. 4,70023/- which
included capital cost for the first year and working capital for the next 3 years. The loan can be repaid
in 12-13 years depending on the yield and the price of the tea leaves and would provide a net saving
ranging from Rs 40,000-Rs 60,000 per hectare/ year for the entire loan period. The detail worksheet
is provided in Annexure I. since the initial investment is high, the subsidy component from Tea Board
is essential for making this investment financially viable for the small tea growers in the prevailing cost
and price regimes of the Indian tea industry.
12. Conclusion :-
Keeping in view the study findings and our feedback from tea growers, the model scheme for 1 ha. Of
Tea plantation has been prepared. Further, the following issues / suggestions which need to be
addressed with a view to provide opportunity to extend credit support to tea growers by banks one
hand and create avenues for tea growers for new planting, rejuvenation and replanting of old
plantations. Thus the concerted efforts of all stakeholders will give impetus to the tea industry in
Himachal Pradesh :-
A. Issues :-
a. The whole economics or financial viability of tea plantations depends on sale of green
leaves. The assured agreements with processors is the pivotal point in the tea plantation
activity.
b. Lack of uniformity in quality of leaves among Small Tea Growers (STGs) owing to
fragmented land.
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c. Lack of good agricultural practices due to non-availability of adequate land.
d. Lack of availability of bank finance.
B. Suggestions :-
a. To chalk out rehabilitation plan for Kangra Tea in coordination with Tea Board and all
stakeholders.
b. To form Tea Farmers’ Producers Organisations (FPOs) and to provide credit support to
these entities.
c. To enhance quality and uniformity of tea quality among Small Tea Growers to get good
price in the market.
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Annexure-1
A) Unit cost of 1 ha of Tea Plantation
Area (ha) 1.0
Spacing (m x m) 1.2 X0.6 X0.6 Wage rate/Manday(MD) 200
No of tree bushes/Ha 15556 Mortality replacement 10%
Survival @ 90 % 14000
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B) YIELD AND INCOME FROM ONE HACTARE OF TEA PLANTATION Years
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Quantity of leaf (kgs)# 0 0 0 0 2200 3700 5900 8900 11100 13300 14800 14800 14800 14800 14800
Price/kg of green leaf 15
Income from sale 0 0 0 33000 55500 88500 133500 166500 199500 222000 222000 222000 222000 222000
Subsidy from Tea 131102 87402
Board
Total Income 131102 87401.6 0 33000 55500 88500 133500 166500 199500 222000 222000 222000 222000 222000
Total Expenditure 347999 51574 30450 40000 40000 80000 80000 80000 80000 80000 80000 80000 80000 80000
Income - 35828 - -7000 15500 8500 53500 86500 119500 142000 142000 142000 142000 142000
216897 30450
Note: # The method /system of planting recommended by Tea Board & IHBT and adopted in this model scheme is Double hedge row which accommodate around 18518 tea plants per ha. This is
around 17 % more than the normal planting method i.e. Single hedge row being adopted in other parts especially west Bengal and North East. Thus, green leaf yield is considered accordingly.
NPV 43512
B:C 1.07
IRR 17.74%
C Cash flows 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Loan /Loan os 295799 200194 180653 228215 281601 305061 336001 340655 323867 283065 222367 154385 78245 0
Total Loan O/s 295799 244031 206536 254215 281601 305061 336001 340655 323867 283065 222367 154385 78245 0
Interest (TL@ 12%, ) 35496 24023 21678 27386 33792 36607 40320 40879 38864 33968 26684 18526 9389 0
Total outstanding net 200194 180653 228215 281601 315394 341668 376322 381534 362732 317034 249052 172912 87635 0
of subsidy received
Net Income -216897 35828 -30450 -7000 15500 8500 53500 86500 119500 142000 142000 142000 142000 142000
Repayment 0 0 0 0 10333 5667 35667 57667 79667 94667 94667 94667 87635 0
Saving for the 0 0 0 0 5167 2833 17833 28833 39833 47333 47333 47333 54365 142000
households
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