TEA INDUSTRY

Evolution of the Tea Industry

History of Tea Leaf
The origin of the tea bush has been contested by scholars. It is native to certain areas ranging
from the interior of Southern China to the border of Assam. Tea has only one species which is
called “Camellia Sinosis [(L).O.Kuntze]. It came to the light in Fourth century and by about
650 A.D. during the TS’ang dynasty the growing popularity of tea induced farmers in most
provinces in China to cultivate Tea and subsequently became an article of commerce. In the
early years of 780 A.D., LuYu commissioned the first book on tea entitled “Chaching“ a tea
classic.

The first printed reference by a European writer about the mysterious Chinese drink was dated
to 1559 A.D. The knowledge of tea travelled slowly from East to West. The Dutch Merchants
established a trading base at Benton by 1596. The first consignment of tea from China was
transported to Benton in 1606 and from there it was shipped to-non-tea-conscious Europe. By
the mid-1650s, a quick brisk trade in tea was made with Holland. In France, the future of tea
was linked with the Sterling Company.

Beginning of Tea in India

The discovery of indigenous tea in Assam in 1823 led to the origins of the tea industry in
India. However, the Calcutta Agricultural Society differs from the above opinion. It has
consistently held that in the early 1700's, the ships of the East India Company frequently
brought the tea plants in the country by way of curiosity. Col. Kyd, a resident of Calcutta and a
famous botanist, saw tea plants growing in his garden in 1780. This information was sent to Sir
Joseph Bank and in 1782 his garden was handed over to Botanical Garden of Calcutta.
In 1788, Sir Joseph Bank recorded the existence of indigenous tea growing wild in Coochbehar
and Rangpur districts of Bengal and suggested the cultivation of this plant. The wild teas of
Coochbehar confirmed the first discovery of indigenous tea in India.

Birth of Indian Tea industry

The birth of Indian tea industry was marked by the discovery of indigenous teas plant in Assam in
1823 by Robert Bush. This received momentum when the East India Company in 1833 lost the tea
trading monopoly in China. In 1835, a scientific deputation was sent to Assam to report on prospects of
the tea industry and the team saw tea plants in many parts in the hills between Assam and Burma. In
1836, C.A. Bruce was made the Superintendent of Tea Forests. Among others, he formed the Bengal
Tea Company at Calcutta with the objective of purchasing the produce from the East India Company’s
tea plantations in India. A similar Company was also established in the same year in London with the
same objectives.
In 1839 the first consignment of tea from India (eight chests) was shipped to London and it was
auctioned at a price ranging from six to thirty four shillings per pound. In 1840, two thirds of
experimental teas were handed over to new company. In 1852, the first tea company in India paid its
final dividends. The second limited company in 1859 was formed in Assam called Jorhat Company.
During 1862-67, tea
cultivation started in Chittagong and Chotta Nagpur.
Ultimately tea cultivation was commissioned in many districts in India wherever there was some hope
of a success.Within a few months, India along with Sri Lanka dominated the world tea trade/market.
Tea Trade
In 1874 the land located in the East of Teesta river was explored with the foreign liability of
growing tea plants. By 1876 as many as 13 gardens had started cultivating tea. In 1878 the first
two indian tea gardens by name Megalkat Tea Estate and Indian Tea Company Ltd. Were
established though the Company actually received a grant of 741 acres on 19 March 1981. The
first tea auction started on May 26, 1841 in London under the pioneering leadership of Lyal &
Co., Mincing Lane, London was the centre of World Tea activities prior to World War II. The
first tea auction in Calcutta in December 27, 1861 and the second in Cochin in 1947 for South
Indian teas were held. Subsequently, many tea auction centres were opened in Coonoor,
Guwahati, Amritsar, Siliguri etc.
Formation of Tea Association
The Tea planters formed an association named Indian Tea Association (ITA) in 18 May 3 1881, with its
headquarters at Calcutta for promoting their common interest and objectives. Subsequently many
associations were formed in various tea regions of North and South India.

Tea Research
For greater interest of the industry, the Tea Research Association was established in 1964 at Tocklai,
Assam and was funded jointly by Council of Scientific and Industrial Research [CSIR] and Tea Board
of India. Subscriptions of member tea estates and other associate members were called for to carry out
the research work. United Planters Association of South India [UPASI] Tea Research Institute had
its origin in the year 1926 at Coimbatore District, Tamil Nadu.
International Tea Regulation Scheme
During the second half of the 19th century and first half of the 20th century, four major slumps [1866,
1879, 1896-1904, and 1920] took place. To counteract the situation India, Sri Lanka, Netherlands and
East Indies reached an agreement on voluntary basis to curtail tea production. The world economic
depression resulted in decline in tea consumption and stocks continued to pile up till 1932
International Tea Agreement
Producing countries like India, Indonesia and Sri Lanka entered into an agreement on April 01, 1933
for a period of five years to bring about balance between supply and demand for tea in the world
market. A second agreement was signed and came into force for a further period of five years i.e. 01 st
April, 1938 to 31 March, 1943. The agreement was extended upto 31st March, 1948. Further an interim
st

agreement was signed in April, 1948 and continued till 31st March, 1950.
Tea Control Act and its Amendment
The Indian Tea Control Act 1933 was amended in 1938 and 1943, and subsequently in 1950. The
administration of the Act in 1938 was vested in a Committee called “Tea Licensing Committee” which
consisted of a Chairman appointed by the Central Govt. and 14 other members of which 10 were
nominated by the Industry and 04 elected from the constituencies embodied in the Act. The Committee
continued upto 31st December 1949.
Tea Board
Both the Central Tea Board Act 1949 and Indian Tea Control Act 1938 were replaced by the Tea Act 4
1953 which came into effect from 01st April 1954. The functioning of the Central Tea Board and Indian
Tea licensing committee were entrusted with the Tea Board which was responsible for promoting
development of tea industry under the control of Central Government.

India Tea
To begin with it is perhaps desirable to define ‘Tea’. ‘Tea’ has been clearly defined in the Tea
Act, 1953. As per provision of Tea Act, ‘Tea’ means the plant Camellia Sinensis (L) O. Kuntze
as well as all varieties of the product known commercially as tea made from the leaves of the
plant Camellia Sinensis (L) O.Kuntze including green tea. Tea which is available in the market
is in fact ‘Made Tea’. Green leaves plucked from the tea bushes are manufactured into ‘Made
Tea’ or ‘Tea’ in the Tea Factories through a series of manufacturing process. Green leaves, in
the process of manufacturing ‘Made Tea’ or ‘Tea’ also generates by-product known as ‘Tea
Waste’. This ‘Tea Waste’ is unfit for human consumption and has three uses viz.

i) For manufacture of caffeine

ii)For manufacture of Instant Tea and
iii)for using as manure in the tea field.
Made tea or Tea manufactured from green tea leaves is generally classified into two types viz.
Black Tea and Green Tea. Green tea is different from Black tea since fermentation of green
leaves is arrested in manufacturing green tea. Again black tea is of two types viz. Orthodox tea
and CTC tea. Orthodox teas are manufactured with the help of orthodox roller in the process of
rolling while CTC machine/Rotervan is used in rolling process in manufacturing CTC teas.
CTC stands for Crushing, Tearing & Curling. While, most of the teas produced in Sri Lanka is
of ‘orthodox’ variety, Kenya produces mainly CTC teas.

The tea processing in any factory in the traditional way comprises the following phases
1. Withering
2. Rolling
3. Fermentation
4. Drying
5. Sorting & Grading

Apart from Orthodox, CTC & Green tea, powder tea which is known as “Instant tea”: is also
being manufactured in India and in few other tea producing countries of the world like Kenya
and Sri Lanka. The Instant tea is manufactured in separate factories known as Instant tea
factory. The procedure for manufacturing Instant tea is different from that of black tea or green
tea. The raw materials used for manufacturing Instant tea are green tea leaves and/or tea waste.
The manufacture of Instant tea in India has started since 1960.
Tea, mainly the black tea is also being further processed with the help of tea bagging machine
to manufacture ‘tea bags’. This is one of the “convenience” tea generally preferred by the
consumers of the western countries. “Filter papers” is being used as packaging material for
manufacture of tea bags.

Instant tea and Tea bags are generally known as ‘convenience tea’ since these are convenient
for consumers to get the liquor with less hazards. Moreover, in order to preserve the quality of
tea during its different stages of trading activities particularly in retail trading and also to
maintain the uniformity of the quality to the extent possible, black tea or green tea are packeted
either in original form or in blended form in small consumer packs. These are known as
‘Packet tea’.
So tea planters at the garden level, after manufacture of ‘made tea’ from green tea leaves, use
bulk containers or small containers for packaging. Bulk containers are generally consists of
wooden tea chests, polyline jute bags, multiwall paper sacks etc. and can contain 25 kgs. to 55
kgs. of tea depending on the nature or size of the container. Small containers consists of paper
sacks, wooden box, metal caddies, polythene packs etc. and can contain 2 gms. of tea to 1 kg.
tea according to the need of consumers and based on suitability to its handlings. Tea in bulk,
after coming out from the estate is also packed or repacked in small containers by merchant
packers apart from its ‘sale’ in loose form to the consumers. As already mentioned, green tea
leaves plucked from the tea bushes when manufactured in the tea factory through a series of tea
processing like withering, rolling, fermentation, drying etc., converted into made tea.
Depending on the system of tea processing, tea is classified into black tea and green tea. Black
tea is obtained by so called fermentation process where as for making green tea fermentation is
prevented. . The characteristic of the beverage like tea is determined by the major components
of the leaf i.e. polyphenols, the peptic substances, the flavouring constituents and caffeine. The
caffeine is known for its stimulating effect.

Quality of ‘made tea’ or ‘tea’

The term ‘quality’ in its broadest sense is used as a description of all the characters of tea by
which it is judged on its market value. So quality means the summation of the desirable
attributes comprising internal and external characters like aroma/flavor, strength, colour,
briskness and character of infused leaf. The “quality” of the tea conforming to the specification
laid down in the PFA Act may vary. The quality of tea also varies between garden to garden
and also between the teas manufactured at different times -in a particular garden. The green tea
leaves of the plant belonging to the species of Camellia Sinensis has its natural ‘aroma’. The
effort of the tea manufacturer is generally aimed at to maintain the natural aroma in the made
tea as far as possible.
The quality of ‘tea’ depends primarily on the nature and chemical composition of the plucked
leaf which is again dependent on the type of bush, the growing conditions and the kind of
plucked leaf like coarseness and fineness etc. Only careful and proper processing will bring out
the full potential of the green leaf.
Each of the characteristics on which tea is assessed by trade is affected by one or more the
factors involved both in the field and in the factory. Since a variety of factors plays a role and
the production of a particular character is usually obtained at the expense of another, pre-
processing and processing conditions is generally adjusted as to bring about the most desirable
characters in a tea made from a given material.

The factors affecting tea quality apart from those involved in processing can
be distinguished in 3 groups viz. genetic, environmental and cultural.

1)Tea quality is primarily determined by the genetic properties of the tea planting and those
of the tea bushin particular.
 2) Both soil and climate are influencing the quality of tea. Climatic condition
includingtemperature,humidity,sunshineduration,rainfallareimportantindeterminingquality.

3) Field operation like pruning, fertilizing, shading, plucking round and plucking standard
are also playing the important role in determining the quality of tea.
The definition of ‘Tea Waste’ has also been indicated in ‘The Tea Waste (Control) Order,1959.
Accordingly to the said order,
‘Tea Waste’ means tea sweepings, tea fluff, tea fibre or tea stalks or any article purporting to be
tea which does not conform to the specification for tea laid down under the Prevention of Food
Adulteration Act,1954(37 of 1954) but does not include green tea or green tea stalks.
In order to prevent tea from any possible adulteration, the Prevention of Food Adulteration
Act, 1954 is in existence. Tea therefore shall conform to the following specifications as
indicated in the PFA Act, 1954.

4.0 to 8.0 percent by

weight
a)Total ash determined on tea dried to a constant weight at 100° C

b) Total ash soluble in boiling distilled water Not less than 40.0
percent of total ash

c) Ash insoluble in HCL Not more than 1.0

percent by weight on
dry basis
 d) Extract obtained by boiling dry tea (dried to constant weight at Not less than 32.0
100° C) percent

with 100 parts of distilled water for one hour under reflux

e) Alkalinity of soluble ash Not less than 1.0

percent and not more
than 2.2 percent
expressed as K2O on
dry basis

f)Crude fibre determined on tea dried to constant weight at 100° C

Not more than 17.0

percent

Note:-
1. It shall not contain any added colouring matter or added flavouring matter.
2. Provided that tea for export may contain added flavour under proper label declaration.
3. Provided further that the tea used in the manufacture of flavoured tea shall conform to the
standards of tea.

Tea Tasting
Like any other industrial product, tea is also assessed for its quality and value. This is being
done in the first instance, by the tea maker in the factory to ensure of the quality of the product
and to prevent defects if any.
The made tea of an estate, is also tested by the commercial tasters (generally known as broker)
for determining the quality and its value. The term ‘taste’ is used here in its general sense and
includes aroma.
Tea tasting is aimed at describing and evaluating teas in the form of individual grades or as
blended product. The description and evaluation include the appearance of the dry tea, of the
infused leaf and of the infusion obtained by brewing the tea with boiling water, the taste
characteristics of the infusion, commonly called the liquor, etc. During tasting the various
characteristics that make up a tea liquor viz. briskness, strength, colour, body, quality and
aroma or flavour, are assessed individually.
In assessing the characteristics of a tea the taster first examines the dry tea for colours,
uniformity, twist, tip and aroma and then passes on to the infused leaf. Ideally, this should be
of a bright copper colour and substantially devoid of the green tinge of unchanged chlorophyll.
From the colour and evenness of the infused leaf the taster forms his opinion about the quality
of the fermentation. The brightness of the infused leaf is correlated with brightness of liquor
and both are indicative of briskness.
About Tea
Shorn of all beautiful myths and legends, we get the first authentic references to tea and tea
drinking in China in the fourth century A.D. The first person to drink tea was a man named,
Shen Nung, who one day took his wife and children mountain climbing. During the climb
Shien Non Shei became quite thirsty and while he was feeling thirsty a leaf drifted onto his
foot. He picked this leaf up and twisted the leaf with his fingers. The juice of the leaf went on
to his fingers and he tasted the juice with his tongue. The taste of the juice was quite bitter, so
Shien Non Shei felt that this leaf could have medicinal properties and could help quench thirst,
when brewed. Thus, according to legend he was the first individual to drink tea.
The first written reference of tea made and consumed appeared in 350 A.D. Kuo P’o’ updated
an old Chinese dictionary to include the description of tea as “a beverage made from boiled
leaves.” Tea during this time was made of leaves boiled in water with ginger, orange or other
produce added to it. Although tea was mostly consumed for medicinal purposes to treat
digestive and nervous conditions, people living in the interior part of China pressed tea into
brick “currency” to barter with other tribes. From 350 to 600 A.D., the demand for tea
dramatically increased and outstripped the supply of wild tea trees. Farmers began to grow tea
plants in the Szechwan district, but soon tea cultivation had spread throughout China.
In the western world tea was brought first to the notice of the Europeans in the mid of the 16th
century by Ramusio, the famous Venetian writer on travels and voyages. The first public sale
of tea in England was conducted by one Thomas Garway in 1657.
To describe the history of tea cultivation in India around 1774 Warren Hastings sent a selection
of China seeds to George Bogle, the then British emissary in Bhutan for planting the same in
Bhutan. But nothing seemed to have come out of this experiment. In 1776, Sir Joseph Banks,
the great English Botanist, was asked to prepare a series of notes and it was recommended by
him to undertake the cultivation of tea in India. In 1780, Robert Kyd experimented with tea
cultivation in India with seeds, the consignment of which was stated to have arrived from
China. A few decades later it was Robrt Bruce in 1823 discovered tea plants growing wild in
Upper Brahmaputra valley. In May 1838 the first Indian tea from Assam was sent to England
for public sale.
In India, there are three distinctly different tea growing regions. These regions are
geographically separated, thereby producing three entirely different teas both in style and in
taste/flavor. The three regions are: Darjeeling (North-Eastern India), Assam (far North-East
India) and Nilgiri (South India).

DARJEELING

Nestling in the foothills of the snow-covered Himalayan range, Darjeeling grows this exclusive
tea at altitudes ranging from 600 to 2,000 meters. The cool and moist climate, the soil, the
rainfall and the sloping terrain all combine to give Darjeeling its unique "Muscatel" flavor and
exquisite bouquet. The combination of natural factors that gives Darjeeling tea its unique
distinction is not found anywhere else in the world, hence this finest and most delicately
flavored of all teas has over the years acquired such reputation as "Champagne enjoys amongst
wine"

ASSAM
The land of the Tiger and the one-horned Rhino. The land through which the mighty river, the
Brahmaputra, winds its majestic course. Assam - rich in nature's bounty and a rainfall ranging
from 100 to 150 inches per year - a bounty that ensures a very special place for the teas grown
here. These teas are referred to simply as "Assam" and offer rich, full-bodied, bright tea liquor.
For those who favor a bright, strong cup of tea, Assam is "your cup of tea." Assam is the single
largest contiguous tea growing area in the world.

NILGIRI

The Blue Mountains or the Nilgiris are situated in South India. They are a picturesque range of
undulating hilly landscapes where tea is grown at elevations ranging from 1,000 meters to
2,500 meters. Rainfall varies from 60 inches to 90 inches annually. These conditions favor the
fine, elegant flavor and brisk liquor of Nilgiri teas. The combination of fragrance and briskness
makes Nilgiri a truly unique tea, the like of which can be found nowhere else in the world. If
you like a fragrant tea with good body and superlative flavor, Nilgiri should be the one for you.

Apart from the above three distinct tea growing regions tea is also grown in Kerala, Karnataka,
Himachal Pradesh, Uttaranchal, Sikkim, Orissa, Bihar, Arunachal Pradesh, Tripura, Manipur,
Nagaland, Mizoram & Meghalaya and in the adjacent plain areas of Dooars and Terai of West
Bengal.

Brief Introduction to Tea

India is the largest producer and the largest consumer of tea in the world. Tea constitutes an
important part of Indian life. Basically it serves the following purpose,
• As a stimulating hot drink,
• A trade commodity,
• A major export item, and
• As daily income for more than one million workers.

As special as tea is, the gardens too cannot be developed everywhere but in special climatic
conditions. The tea bush known as Camellia Sinensis grows in loose, deep, acid soil, at high
altitude, with summer and autumn rain, in a little heat and little wind. In these climatic
conditions most of the plants die but the tea bush flourishes fantastically.

If left to their own devices, the tea bushes grow to a height of 50 ft, but this becomes
impractical for the tea pickers and hence they are trimmed and kept at an approachable level of
4 ft. The finest tea comes from elevations of 900 to 2100 meters.
A tree plant matures in three to five years and produces a flush, the growth of new shoots. Each
shoot consists of few leaves and a bud. At low altitude the growth of the tea bush is so rapid in
the growing seasons that they need picking every few days to ensure that only the best tips are
plucked. The best tips are those young and tender. Because of this the tea industry becomes
labor intensive. At higher altitudes it takes as long as two weeks to grow a flush. Tea plants do
not produce flushes in cold weather.

Today tea is grown in more than 25 countries around the world. It is cultivated as a plantation
crop, grows well in acidic soil, and a warm climate with at least 50 inches of rain per annum.
Tea’s flavors, quality and character are completely dependent on the region, the altitude, the
type of soil and the climate in which it is grown.
Besides factors such as geography and climate, the fate of tea is also dependent on human
touch. Since all tea comes from one plant, the way it is processed is the artistry we taste in the
final cup.

If the leaves are immediately dried and then heated (steamed) or fired, the tea leaves remain
green, retaining the distinctive flavors and health benefits green teas are known for. If left to
wither, the leaves are transformed through a process known as oxidation (also known as
fermentation) into black tea, of which there are hundreds of varieties.

The Manufacturing Process of Tea

Tea manufacture involves 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 six to seven days. The tip leaves are young and tender,
resulting in a better quality tea. The fresh green leaves then 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, is normally
rolled gently to create a twisted appearance. While tea which is to be used for tea bags, is
shredded and crushed to produce a fine granular powder.
Rolling and crushing the leaves results in rupturing of the leaf cells, which allows oxidation.
This gives the tea its distinctive black colour and flavour. The tea is then dried at high
temperatures to achieve the correct taste. At this point, the stalks and fibre in the tea are
removed, making it suitable to be sold as loose tea. The tea is then passed through meshes of
varying sizes to sort and grade it. The tea power has to be very fine for tea bags. 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.

Tea Drinking in India

In India, tea is a very popular beverage and Indians love their cup of tea. The importance of tea
drinking in India cannot be confined to words, Indians have to have their cup of hot steaming
tea first thing in the morning in order to stimulate their senses and refresh themselves. In fact
some even argue that tea as a beverage enjoys much more preference as compared to coffee in
India. Tea is like a comfort drink for many Indians, especially on rainy days, you can always
catch them savoring a steaming cup of tea along with pakoras (a type of fried snack).

India is the world’s largest producer of tea and most of the tea production in India takes place
in West Bengal and Assam. Tea is popular all over India mainly as an evening drink as well as
breakfast drink but nothing complements a family get-together or a college reunion more than
an endless supply of tea throughout the day. In fact it is so popular that it is a cultural norm tea
to offer tea to guests and visitors instead of alcoholic drinks. Although in recent years many
people have shifted to imbibing tea liquor, the age-old tradition is to blend the tea liquor with a
little bit of milk, add sugar in accordance with one’s taste and then sip it contentedly.

Almost everywhere you go in India you are sure to find tea or ‘chai’ as it is commonly known
in most of the North Indian languages). Although there are lots of different types of tea
available, the most common variety has to be the ‘railway tea’ type hands down. This one is
basically a cheap version (Rs.2-Rs.5 per cup) which is sweet and uniquely refreshing once you
develop a liking for it. This type of tea is made by brewing the tea leaves along with milk and
sugar and serving it steaming hot.

Another famous variety of tea in India is the Masala chai which has spices added to tea during
the preparation. The commonly used spices are ginger, cardamom, cinnamon and black pepper.
However this type of tea does not appeal to all and sundry, it takes some time before you
cultivate a taste for it. The Masala tea (or spices tea literally) is popular in Central India as well
as Northern India only because the people in Eastern India like their tea without any spices.

Tea drinking in India dates back to 750 B.C. (see article about the History of Tea Drinking in
India) and could be described as serendipity when the locals used wild native plants for
brewing this beverage. Gradually other varieties of tea originated. At present, Darjeeling tea
and Assam tea remain the most popular varieties of Indian tea in India as well as worldwide.

India is the largest tea drinking country in the world even though the average consumption per
person is less than half a cup because of the low income level. Over the years, tea drinking has
become an integral aspect of the India culture. It is considered as a way of life. Remove tea
drinking from India and you remove the basic essence of this vibrant and lovely country.

Tea Industry in India

Tea leaves
Tea isn’t simply tea in India but it is like a staple beverage here and a day without it is
impossible and incomplete. Indians prefer their steaming cup of tea because for them it acts as
an energy booster and is simply indispensable. This popular beverage has a lot of health
benefits too as its antioxidants help to eliminate toxins and free radicals from the blood.

Originally tea is indigenous to the Eastern and Northern parts of India, but the tea industry has
expanded and grown tremendously over the years, making India the largest grower and
producer of tea in the world. The tea production in India was 979,000 tonnes as of 2009. In
terms of consumption, export and production of tea, India is the world leader. It accounts for
31% of the global production of tea. India has retained its leadership over the tea industry for
the last 150 years. The total turnover of this industry is roughly Rs.10, 000 crores. Since 1947,
the tea production in India has increased by 250% and the land are used for production has
increased by 40%.

Even the export sector of India has experienced an increase in the export of this commodity.
The total net foreign exchange in India is roughly Rs.1847 crores per annum. The tea industry
in India is labor intensive, meaning it depends heavily on human labor instead of machines.
This industry provides employment to more than 1.1 million Indian workers and almost half
the workforce constitutes of women.

There is a wide variety of tea offered by India; from Green Tea to CTC tea to the aromatic
Darjeeling tea and the strong Assamese tea, the range of tea available in India is unparalleled.
Indians take a lot of pride in their tea industry because of the pre-eminence of the industry as a
significant earner of foreign exchange and a significant contributor to India’s GNP.
The three prominent tea-growing regions in India are Darjeeling, Assam and Nilgiri. While
Darjeeling and Assam are located in the Northeast regions, Nilgiri is a part of the southern
region of the country. A visit to these regions is made truly memorable by the endless rolling
carpets of green which are the tea gardens and one cannot but help feeling enthralled and
captivated at the sight of the huge tea estates. Majority of the tea factories are located within
the premises of the tea estates and this is what accounts for the freshness of the tea. The
process of tea production has a series of procedures and processes. The process starts with the
plucking of tea leaves in the tea estates by women employees carrying a basket over the head
and ends with the production of the ultimate tea.

There are mainly two ways of producing tea in India namely the CTC production and
Orthodox production. CTC is an acronym for crush, tear and curl. The tea produced by this
method is mostly used in tea bags. The orthodox production method consists of five stages,
namely withering, rolling, fermentation, drying and finally storing. It is not possible to
compare the two varieties because their quality depends on factors such as rainfall, soil, wind
and the method of plucking of tea leaves and both possess a unique charm of their own.

As the primary producer of an assortment of tea, India is the ideal destination for all tea
enthusiasts.

The History of Tea Drinking In India

The documented evidence according to the history of tea drinking in India dates back to 750
BC. Tea in India is generally grown in the North Eastern regions and the Nilgiri Hills. Having
evolved since those early days, tea drinking in India has now come a long way. Today this
nation is proud to be one of the largest tea producers in the world. Buddhist monks in India
have used tea for its medicinal value since thousands of years.

According to a very interesting legend, the history of tea drinking in India began with a saintly
Buddhist monk about almost 2000 years ago. It so happened that this monk who later became
the founder of Zen Buddhism, decided to spend seven sleepless years contemplating the life
and teachings of Buddha. While he was in the fifth year of his contemplation and prayer, he
almost fell asleep. He took some leaves from a nearby bush and began chewing them. These
leaves revived him and enabled him to stay awake as he chewed on them whenever he felt
drowsy. Thus he was able to complete his penance for seven years. These were the leaves of
the wild tea plant.

As per the history of tea drinking in India, local people used to brew and drink tea using the
leaves of the wild native tea plants. Since that time, different varieties of tea have emerged; the
most famous among them is the Darjeeling tea. The commercial production of tea in India was
started by the British East India Company and vast tracts of land have been exclusively
developed into tea estates which produce various types of tea.
In the 16th century, the people of India prepared a vegetable dish using tea leaves along with
garlic and oil and the boiled tea leaves were used to prepare a drink as well. The first Tea
Garden was established by the British East India Company by the end of the 19th century after
the Company took over tea cultivation in Assam, a region in the North Eastern part of India.

One of the most popular snippets related to the history of tea drinking in India dates back to the
19th century when an Englishman noticed that the people of Assam drank a dark liquid which
was a type of tea brewed from a local wild plant. In the year 1823, a Singpho King offered an
English Army Officer tea as a medicinal drink.

Tea drinking has evolved in different ways over the years in India and differs from region to
region. First thought of as the drink of the Royals, tea has now become the favorite of the
common man as India leads the world in tea drinking. From the humble roadside tea stalls and
the railway platforms to the boardrooms of corporate India, tea is easily available. The cup of
sweet and refreshing chai available in teashops or train stations to the masala teas of North
India, the variety of brews available is numerous.

According to the records, Assam tea is named after the region from where the tea comes and
has revolutionized the tea drinking habits of the Indians. Most Indians drink tea with milk and
sugar. Traditionally, a guest in any Indian home is welcomed with a cup of tea.

Size of Tea Industry

Today Indian Tea Industry is having 1692 registered tea manufacturers, 2200 registered tea
exporters, 5548 number of registered tea buyers and nine tea auction centers. All-India Tea
production rose by 12.3% to 1.62 lakh tonnes during January-April 2010. The Southern states
performed better than the Northern counterparts. The states of Tamil Nadu, Kerala and
Karnataka recorded between 13-24% growths. Production in Assam-the largest tea producing
state in India, recorded a 9.6 % growth.

India is the second largest producer of tea in the world with production at 979 million kg in
2009. According to the prediction of a normal monsoon forecast by the India meteorological
department, the Tea Board had earlier said that production in 2010 could be around one billion
kg.

However, achievement of that target looks dicey. This is because Assam has witnessed
excessive rains and pest attacks which have already impacted production in Assam

Domestic and Export Share

The export market for Indian Teas are mainly in the Russian and CIS countries with 90 Million
kgs of the total exports going to these countries. This is equivalent to 43% of India's Tea
exports. India exports Tea to most of the European Countries, U.S.A. Japan, West Asia and the
Asia Pacific Region. In fact, there is hardly any country where Indian Tea is not found.
In 2009 the Tea exports had declined by 6.2% but was expected to rise in 2010. Thus, the tight
demand-supply situation in the global market and an increase in the domestic output will
enable the Indian tea industry to see a partial recovery in its exports.

Tea prices, which showed signs of easing are already moving northward. Tea prices in India
have risen from Rs75.6 a kg in March 2010 to Rs.97.5 a kg in May 2010. However, prices
were 16.2% lower than the year-ago level.

Top leading Companies

 Hindustan Level Ltd
 Tata Tea Ltd

 Ducans Industries

 Wagh Bakri Ltd

 Goodricke Group Ltd

 Hasmukhrai & Co

 Girnar Food & Beverages P Ltd

 Sapat Packaging Industries.

Employment opportunities

There are a variety of jobs one can specialize in Indian Tea Industry. Tea tasting is one of the
highly specialized areas of work. Research, plantation management, tea brokerage consultancy
are some of the areas which can be specialized. One can work as a factory manager and it
involves supervision of all plantation work right from planting, plucking, processing to packing
and transport of tea to auction houses. Anyone with basic educational background can get into
tea industry and pick up the skills required for the job. However, a degree in agricultural
science or a B.Sc in botany, food sciences, horticulture or allied fields is preferred in today's
world.

The minimum qualification requiring admission in a training institute is class 10 or 10+2.These

institutes teach tea production to processing, finance, and sales where tea tasting forms part of
the curriculum. So, there is wide scope for careers in the tea industry, which caters to a
lucrative market internationally with the UK and US being the chief importers. Though it is not
a very well known career option but a job in this industry can be interesting and lucrative as
well

Tea Industry provides direct employment to more than a million workers mainly drawn from
the backward and economically weaker section of the society. It is also a substantial foreign
exchange earner and provides sizeable amount of revenue to the State and Central Exchequer.
Presently, Indian tea industry is having [1].
• 1655 registered tea manufacturers,
• 2008 registered tea exporters,
• 5148 number of registered tea buyers,
• Nine tea auction centres.

Latest developments
 Coonoor in Tamil Nadu is working on a strategic plan for an ambitious growth of its tea
industry over the next seven years.
 The government has directed to submit by a strategic plan for the next phase of growth
in the industry during the remaining 11th plan (2007-12) and the 12th plan (20012-17).

 In 2009 the global trends during the recession-hit period, the export performance of
Indian teas was a mixed bag. Though in 2008 quantity declined by 14 million kg to 192
million kg from 203 million kg, the value was higher by Rs.224 crore due to better
realization per unit by Rs.19 per kg. Total value of exports was Rs.2, 617 crore as
against Rs.2, 393 crore in 2008.

 The Tea Industry is an agro based labour intensive industry. It provides direct
employment to over 1 million persons. Through its forward and backward linkages
another 10 million persons derive their livelihood from tea. In Northeast India alone,
the tea industry employs around 900,000 persons on permanent rolls.

 The Tea Industry is one of the largest employers of women amongst organized
industries in India. Women constitute nearly 51% of the total workforce. There is no
gender bias with respect to employment benefits.

 The Plantations Labour Act allowed employment of children above 12 years of age
prior to 1987. This provision has since been abolished. No child below the age of 14 is
employed in the tea estates now. In fact, following a recommendation by the CCPA in
1995, tea estates have stopped employment of any person below the age of 15 years.

Different Types of Tea

All the tea that we drink comes from the Camellia Sinensis plant, or the tea plant. Although
one would come across different varieties of tea in the world the three main varieties are the
India tea, the China tea and the hybrid tea. It is from these that the different types of tea like the
green tea, the black tea, the white tea, the herbal tea and oolong tea are prepared.

Modern pyramidal nylon tea bag

(1) Green Tea: When tea leaves are picked, they generally whither and dry and when this
occurs, oxidization takes place. When green tea is manufactured, it is not allowed to oxidize.
The leaves are dried very quickly either in a pan or an oven to dehydrate them and then they
are stored. This process retains the polyphenols catechins and the flavanoids which make
drinking green tea a healthy and beneficial option. However green tea possesses a grassy taste
and it loses its flavor within a year.

To brew a cup of green tea, water which is not more than 80 degrees Celsius should be poured
over the tea leaves. Let the leaves steep in the water for about two to three minutes. Some of
the benefits of green tea are its antioxidant properties which aids in preventing cancer, raising
metabolism rate and cutting fat and even reducing the probability of heart diseases. Due to its
short brewing time, green tea is stimulating.

(2) Black Tea: This tea is stronger than any other type of tea. The caffeine content is higher
in black tea as compared to the less oxidized varieties. It retains its flavor for many years.
Black tea is the tea that enjoys the maximum sales in the world.

To brew a cup of black tea we need a teaspoonful of tea leaves for a cup of tea. The tea leaves
are steeped in boiling water for at least three to four minutes before it is strained and served.
Plain black tea without sugar contains antioxidants and is beneficial in reducing cardiovascular
diseases.

(3) White Tea: This is the rarest variety of tea. The leaves are picked and harvested before
they are fully open and the buds still have a covering of white hairs on them. White tea
undergoes the least processing and is also not fermented. It has a light and sweet flavor and
contains less caffeine and more antioxidants than any other type of tea.

The ideal temperature of water for brewing white tea is 76 to 85 degrees Celsius. The leaves
should be steeped in water for at least seven to eight minutes.

(4) Herbal Tea: Tisane or ptisan is an herbal infusion. Tisane is made with any part of the
plant either dried or fresh flowers, roots, seeds or leaves over which boiling water is poured.
Flavored teas are prepared by adding this to regular tea like the jasmine tea of China. There are
different types of herbal tea which can be consumed for medicinal purposes.

(5) Oolong Tea: Being of Chinese origin, this tea is a cross between the popular black and
healthy green varieties and the two styles commonly associated with this tea are green and
amber. The uniqueness of this tea is attributed to the different manner in which its leaves are
prepared and owing to this reason apart from being bereft of the leafy flavor of the green tea its
taste is distinct from other types of tea as well.

The traditional Oolong tea is brewed in a special type of pot known as Gaiwan and the final sip
may vary according to the length of brewing time.
Growers & Area
Production of Tea
Export
Tea Prices
Tea Consumption

Global Tea Scenario

Tea is one of the most popular and widely consumed hot beverages all over the world. Today
cultivation of tea is spread over all the continents wherein more than 30 countries are into tea
production. The estimated global production is 3800 million kg, out of which 43% is exported
and the world consumption being 3700 million kg approx., the global production and
consumption are finely balanced with production little ahead of demand. Tea, being an
agricultural commodity, its production is bound to fluctuate due to vagaries of nature; the
prevailing difference between production and demand is well below any reasonable limits.

Amongst all tea producing countries, the major producers are India, China, Sri Lanka, Kenya
and Indonesia. These five countries contribute 77% of the total world production and 80% of
global exports.

In the past few decades, many new entrants have joined the tea family; notable among them are
African countries like Kenya, Malawi and Turkey etc. In the international market, the Vietnam
and China have emerged as the prominent forces to reckon with, during the last decade.

Across various countries, the average per head consumption of tea varies widely, from more
than 2 kg in Ireland and the U.K. and around 1 kg in Sri Lanka and Pakistan to only 800 grams
in India. Still despite having one of the lowest per head consumption in the world, the total
consumption in India is the largest due to its population size. This distinct position is in sharp
contrast with other producing countries, which hardly have any domestic demand.

In the last decade, there has been a relative decline in the production of black teas and an
increase in the production of green tea which has more than doubled 692 m.kgs in1998 to 1490
m.kg in 2007; this is mainly due to a huge expansion in China. Over the past ten years, the
entire increase in global production is accounted by the Green Tea since the black tea
production remained static around 2300 million which could be attributed to the scientific
studies linking green tea drinking with reduced cancer risk whilst the latest studies have proved
that black teas too have the same healthy properties as that of green tea.

Since 2001 China’s production has grown by 464 m.kgs i.e. 8.8% cumulative annual growth
and because of this steady growth, India’s position has been pushed to 2 place since 2006
nd

when China’s production exceeded India’s for the first time in 110 years and has continued to
be higher since then.
Indian Tea Scenario:

In India, tea cultivation on commercial scale was first started in Assam in 1839 and then it was
extended to other parts of the country between 50’s and 60’s of the 19 century. However, due
th

to certain specific soil and climatic requirements its cultivation was confined to only certain
parts of the country.

Major tea producing states in the country are Assam, West Bengal, Tamil Nadu and Kerala.
75% of the total tea produced in India is accounted by Assam and West Bengal together. Some
of the world’s finest teas are produced in India. While Assam teas are famous for their strong,
brisk and full bodied liquor; Nilgiri teas are well known for their delicate flavor, strength and
brightness; and the production of the famous Darjeeling tea is aided by the low temperature in
the hills of Darjeeling. With their own diverse agro-climatic conditions, other areas produce
medley of tea which suits many different tastes. The distinct characteristics of each region set
them apart
from one another in many different ways.

In India, tea industry is one of the oldest agro-based well organized industries. More than a
million workers get direct employment from this industry of which a sizeable number are
women. A large number of temporary workers are also engaged during the plucking season.

The labor cost is the largest cost overhead accounting for about 60% of the total cost of
production of Indian tea because the tea plantations are not just economic production units, but
rather social institutions, which controls the lives of their resident work force to a large extent.
Apart from employment, the plantations are also responsible for providing house, water,
welfare and many other facilities that affect the daily lives of the workers. This is because most
of the employees come from socially and economically weaker sections of the society and
majority of employees are women who work and reside in an ideal industrial community. Their
livelihood is
directly linked with the prosperity of the tea industry. Therefore, the tea industry must grow,
not only to fulfill its primary function of producing a wholesome beverage for domestic and
overseas consumer, but also to fulfill its social obligations in sustaining and improving the well
being of all those who are dependent on its fortunes.
India has been a dominant player in the global tea industry. Despite its fluctuating situation in
the share of world exports, still India is a key source for tea as well as the largest market.

The industry faced steep decline in prices during 1999 to 2006, which brought out the
vulnerable areas that need to be addressed for guarding against reoccurrence of such
eventualities and also achieve sustainable global competitiveness and sustainable livelihood to
millions of workers employed in the industry. Around 130 gardens were closed, abandoned or
suspended their operations for some time due to this recession of which majority of tea gardens
have reopened with the gradual improvement in tea prices from 2008 onwards. The decline in
the prices has mainly been due to strong growth in supply in the face of sluggish demand.

The tea industry sees fluctuating trends due to agricultural nature of the operations, long
gestation periods and unstable prices of tea which are not likely to undergo any changes in the
future. In the past, tea prices have shown brief periods of boom followed by longer periods of
depression.

During recession, the root causes for the closure of tea gardens in several parts of the country,
as reported by the experts, are that these gardens were inherently weak and suffered from low
productivity and lack of investment on developmental activities. Therefore, it becomes very
important that suitable packages for raising the productivity with cost effectiveness suiting to
the conditions of under/less developed sectors are devised and put into place quickly.

The problem of ageing and senile bushes is a major problem for the Indian Tea Industry. More
than 21.2 Million hectares constituting a substantial chunk of Indian Tea gardens are in the end
of economic life age category at present, because of which the industry is running down
gradually in vitality and productivity and faces a high cost of production. This situation can
endanger the prospects of keeping the plantations in a state of maximum vigor if not countered
effectively now.

Renovation of the field assets and R&D on a sound footing- financially, organizationally and
managerially would help succeed in meeting the challenges of the future. The research
institutes are expected to continuously develop appropriate technology suiting to the demands
of the industry and disseminate the same. Therefore, research requires backing from well
spread, fine tuned, efficient extension services, covering different regions and all segments of
the industry. Adequate technical support is not available to the small and medium size
producers. Thus, it becomes necessary for the research institutes to set up a dedicated extension
service exclusive for the benefit of small and medium producers.

Over the past 10-15 years, the emergence of small sector had assumed a form of a socio-
economic movement and served as a vehicle for social transformation in the N.E. region as
well as in North Bengal and Bihar state which has also opened up avenues for setting up of
new tea factories in the small scale industry sector leading to generation of employment in the
tea industry. 26% of the total production of India is accounted for by this tiny sector. This
sector has its strength in the young and most productive age of the plantations of the
reasonably high clonal composition, low cost of production and the youth segment of the
entrepreneurs with receptiveness to a new and improved agro-technique. In both Kenya and Sri
Lanka too, most of the success of the tea industry is linked to the growth of the small holder
sector over past few
decades. The size of production from the small sector in Kenya and Sri Lanka are interestingly
at par with the volume of tea produced by the small growers in India.

Because of the scattered nature of holdings, the major problem faced by the small growers in
India is the inadequacy of the technical guidance. 2009-10 witnessed international prices
bouncing back even surpassing the highs attained in 2008 which was primarily driven by
almost unprecedented drop in production due to unfavorable weather in India, Sri Lanka and
Kenya proving once again that climate related swings are the key determinants of the global
demand supply balance. Despite economic downturn, the facts that demand for tea has
remained relatively robust have strengthened the belief that the prices will remain firm even
when production returns to normal levels. Even though the stock has depleted in the major
importing countries and consumption growth in India and China, it is optimistically expected
that the prices will not sink back to the previously depressed levels.

Therefore, there arises a need to understand the factors which influence the demand and supply
scenario and the price fluctuations in the Indian Tea Industry so that the practitioners’ can
modify their strategies and adapt to the changing environment for their own benefits as well as
aim at induction of professionalism in plantation management and improve labor productivity.
This paper seeks to address this issue and find out the ways to combat this situation. This paper
aims at studying the Indian Tea Industry by applying the concept of “Forward Engineering”
which is based on a new paradigm of a fusion between rationality and creativity, and it
combines the rational-analytic and the intuitive creative approaches to find unique solutions
(Sharma, 2009). This paper examines this concept through qualitative analysis of data and
information gathered through interviews with Tea Board Officials, Tea Garden owners,
Intermediaries, Auction houses, Suppliers etc. , public documents (e.g. annual reports), and
related research literature. The study using Forward engineering tries to provide a foundational
premise for the strategic gearing of Indian Tea Industry keeping in view its existing and new
capabilities with respected to current and anticipated challenges in a competitive environment.
Thus, it tends to reveal the strategies and action plans for Indian Tea Industry based on mind
pooling, METRIC
analysis and other forward engineering tools.

RULES AND REGULATION OF TEA INDUSTRY

THE TEA ACT, 1953
AN ACT to provide for the control by the Union of the tea industry, including the control, in
pursuance of the International Agreement now in force, of the cultivation of tea in, and of the
export of tea from, India and for that purpose to establish a Tea Board and Levy a duty of
excise on tea produced in India.

1. Short title, extent and commencement:-

(1) This Act may be called the Tea Act.1953.
(2) It extends to the whole of India: Provided that it shall not apply to the State of
Jammu and Kashmir except to the extent to which the provisions of this Act relate to the
control of the export of tea from, and the cultivation of tea in India.

(3 ) It shall come into force on such date as the Central Government may, by
notification in the Official Gazette, appoint.

2. Declaration as to expediency of control by the Union :-

It is hereby declared that it is expedient in public interest that the Union should take under its
control the tea Industry.

3. Definitions :- In this Act, unless the context otherwise requires-

(a) “Board” means the Tea Board constituted under section 4;
(b) “Broker” means a broker of tea;
+(c) “cess” means the duty of excise imposed by section 25 ;
(d) “Customs-collector” means a Customs-collector as defined in clause (c) of section 3
of the Sea Customs Act, 1878 (VIII of 1878) for the purposes of that Act, or of that Act
as applied to the import and export of goods by air, or a Collector of Land Customs as
defined in clause (c) of section 2 of the Land Customs Act, 1924 (XIX of 1924), as the
case may be;
(e) “dealer” means a dealer in tea ;
(f) “export” means to take out of India by land, sea or air to any place outside India other
than Bhutan and Nepal and any other country or territory notified in this behalf by the
Central Government by notification in the Official Gazette ;
(g) “export allotment” means the total quantity of tea which may be exported during any
one financial year ;
(h) “Fund” means the Tea Fund referred to in section 27 ;
(i) “manufacturer” means a manufacturer of tea ;
(j) “member” means a member of the Board:
(k) “owner”-
(i) with reference to a tea estate or garden or a sub-division thereof the
possession of which has been transferred by lease, mortgage or otherwise,
means the transferee so long as his right to possession subsists; and
(ii) with reference to a tea estate or a garden or a sub division for which an
agent is employed, means the agent if, and in so far as, he has been duly
authorised by the owner in that behalf;
(l) “prescribed” means prescribed by rules made under this Act ;
(m) “standard export figure” means such quantity as the Central Government may, by
notification in the Official Gazette, specify pursuant to any international agreement in
this behalf ;
(n) “tea” means the plant Camellia Sinensis (L) O. Kuntze as well as all varieties of the
product known commercially as tea made from the leaves of the plant Camellia Sinesis
(L) O. Kuntze including green tea ;
(o) “Tea seed” includes seeds, roots stumps, cuttings, buds, and any living portion of the
plant Camellia Sinensis (L) O. Kuntze which may be used to propagate that plant.

THE INVESTIGATION OF TEA UNDERTAKING/TEA UNITS ( PROCEDURE )

RULES 1981.

In exercise of the powers conferred by section 49 of the Tea Act, 1953 (29 of 1953), the
Central Govt. Hereby makes the following rules, namely :-

1. Short title : These rules may be called the investigation of Tea Undertaking/Tea Units
(Procedure) Rules, 1981,
2. Application : These rules shall be apply to the investigation in respect of any tea
undertaking or tea unit referred to in section 16B of the Tea Act, 1953/(29 of 1953).
3. Definitions : In these rules, unless the context otherwise requires ; (a) ‘Act’ means the
Tea Act, 1953 (29 of 1953) ; (b) ‘Investigator’ means the person to body of persons
appointed by the Central Govt. for the purpose of making any investigation under
section 16B of the Act. (c) ‘Investigation’ means investigation referred to in section
16B of the Act.(d) the words and expressions used in these rules and not defined but
defined in the Tea Act, 1953 (29 of 1953 ) shall have the meanings respectively
assigned to them in that
Act.

4. Procedure to be followed in making an investigation: (1) In making an investigation, the

investigator shall as far as practicable, follow the procedure set out below namely : (a) Where
the
investigation is ordered under or any of the clauses (a) to (c) of subsection (1) of section 16B
of the Act, the investigator shall as far as possible, for the purpose of arriving at a finding,
collect facts and figures for five years immediately preceding the year in which the
investigation is
Ordered, of the financial position, the volume of production the statutory financial liabilities of
the concerned tea undertaking or tea unit. (b) Where the investigation has been ordered under
clause (d) of subsection (1) of section 16B of the Act, the investigator shall, in the course
of investigation inter-alia examination. (i) The financial position of the tea undertaking tea unit
and see whether it has been prompt in making payment of taxes and discharging its other
liabilities ; (ii) The composition of the management of the tea undertaking/tea unit and the
relations thereof with the labour ; (iii) The composition of the management of the tea improve
the quality, quantity and sale price of tea ; (iv) Any other matters which the investigator
considers relevant or necessary for the purpose. (2) The investigator may, before commencing
the investigation, call upon the management of the tea undertaking/tea unit, the employees of
such tea undertaking or tea unit, and such other persons as are concerned with the
investigation, to furnish the investigator written statements relating to the affairs of the tea
undertaking or tea unit, as the case may be. (3) Every written statement referred to in sub-rule
(2) shall be signed by the person furnishing it. (4) In support of the facts and figures, if any,
collected in pursuance of sub-rule 1, the investigator may, to the extent he considered it
necessary, take evidence in writing (either I the form of oral testimony of affidavits) from
persons connected with the tea undertaking o tea unit concerned, whose evidence is, in his
opinion, relevant for the purpose on
investigation.

(5) Opportunity of hearing : The investigator shall, before completion of his investigation, if
the management and the employees of the tea undertaking or tea unit, as case may be, in
respect of which investigation is ordered, reasonable opportunity of being heard including
opportunity to adduce any evidence.

(6) Submission of report : (1) The investigator shall after completing the investigation submit
a report of the Central Govt. within the period specified therefore. (2) In making the report
referred to in sub-rule (1) the investigator shall states ; (a) Whether the opinion referred to in
section 16B
of the Act. formed by the Central Govt. is justified and correct (b) What are the causes for the
state of affairs of the tea undertaking or tea unit which necessitated the investigation ; and (c)
How the state of affairs , if they still exit, can be remedied.

(7) Power to regulate procedure : The investigator shall have the power to regulate his or its
own procedure.

The Tea Board (Write Off Losses ) Rules, 1996**

In exercise of the powers conferred by sub-section (1) of Section 49 read with clause (ja) of
sub-section (2) of Section 49 of the Tea Act, 1953 (29 of 1953) the Central Government
hereby makes the following rules namely :-

Short Title and Commencement (1) These rules may be called the Tea
Board (Write Off Losses) Rules, 1996 (2) They shall come into force on the date of their
publication

Definition: In these Rules, unless the context otherwise requires- (a) “Act” means the Tea Act,
1953 (b) “Accounts Officer” means the Accounts Officer of the Board (c) “Board” means the Tea
Board constituted under Section 4 of the Act (d) “Chairman” means Chairman, Tea Board and
includes any person exercising for the time being the powers of the Chairman (e) “Chief Regional
Executive” means the Chief Regional Executives of the Board (f) “Committee” means any
committee constituted by the Board under Section 8 of the Act (g) “Competent Disciplinary
Authority” means the Central Government, the Board, Chairman, Deputy Chairman as the case
may b (h) “Deputy Chairman” means the Deputy Chairman of the Board (i) “FA & CAO” means
the
Financial Adviser and the Chief Accounts Officer of the Board (j) “Financial Year” means the year
beginning on 1st of April and ending on the 31st March following (k) “Money” means money
received by the Board under Chapter V of the Act (l) “Official” means officers and employees of
the Board including officials on deputation to Board (m)“Schedule” means Schedule attached to
these Rules (n) “Secretary” means Secretary of the Board (o) “Stores” means all articles and
materials purchased or otherwise acquired for the use of Tea Board, including not only expendable
and issuable articles
in use or accumulated for specific purpose but also articles of dead stock of the nature of plant,
machinery, instrument, furniture, equipment, fixtures but excluding books, publications and
periodicals in a library.

3. Removal of Doubts : Where a doubt arises as to the interpretation of any of the provisions of
this rule, the matter shall be referred to the Central Government for decision.

4. Defalcation and Losses: (1) Any loss exceeding Rs. 300/- of shortage of money, stores or other
properties held by or on behalf of Tea Board, caused by defalcation or otherwise including
losses and shortage noticed as a result of physical verification which is discovered by any branch of
the Board including Regional, Zonal and Sub- Regional offices, shall be immediately reported by
official concerned who has detected the loss to the next higher authority as well as to the Accounts
Officer and FA & CAO even when such loss has been made good by the party responsible for it
and thereafter submitted to the Chairman who will deal with tem finally if the losses involved does
not exceed amount which he is competent to write off the loss. (2) Reports of the Chairman in
respect of all losses exceeding Rs. 300/- each and reports by him which he cannot dispose of finally
under sub rule (1) shall be submitted to the Committee/Board, as the case may be.

5. Detection of Losses (1) Losses arising out of mistake negligence, fraud, theft and carelessness
and
misappropriation* to the property and money of the Board as soon as may be detected by an
official of the Board shall forthwith be reported by the said official to his/her immediate superior
officer; (2) On receipt of report as per Sub-Clause (1) above by a superior officer, the said superior
officer shall
ascertain the quantum of loss in terms of money and book-value and also indicate the
person/persons primarily responsible for such loss and on completion of such preliminary
investigation shall within 21 days from the date of receipt of the report from his subordinate
officer(s), submit a detailed report to the FA&CAO and Secretary and/or Chief Regional
Executive, as the case may be. *(3) In addition to taking action as prescribed in sub-rules (1) and
(2), the authorities mentioned above shall follow the provisions indicated below in cases involving
loss of substantial nature including destruction of Board’s Property as a result of fire, theft or the
like and such loss having an assessed value of Rs. 10,000/- or more. *(i) When lose of substantial
nature having an assessed value of Rs. 10,000/- or
more due to suspected theft, fraud, fire or the like occur in any office or installation, such cases
should invariably be reported to the police for investigation on the first available opportunity. (ii)
For the purpose of the above instruction all losses excepting the losses due to the suspected
sabotage of the assessed value of Rs.10,000 and more shall be regarded as ‘material’. All cases of
suspected sabotage shall be reported to the police promptly irrespective of the value of the loss
involved. (iii) Once the matter is reported to the police authorities, all concerned should assist the
police in their investigation. A formal investigation report should be obtained from the police
authorities in all cases which are referred to them as indicated above

RTI ACT
In order to promote transparency and accountability in the working of any Public Authority by
securing access to information, Parliament enacted the Right to Information, 2005 . The act
was notified in gazette of India extra ordinary on 21 st June, 2005.

The Tea Board, India is a Public Authority as defined under the act. The citizens may obtain
information under the provision of the act in respect any of the subject(s) / matters regarding
Tea Board as noted below on payment on prescribed fees.

TEABOARDINFORMATIONMANUAL
Published as per provisions of Section 4 of the Right to Information Act 2005)

   

1. The Particulars Of The Organisation, Its Functions And Duties;

2. Power And Duties Of Its Officers And Employees;

3. The Procedure Followed In Its Decision Making Process, Including Channels of

Supervision And Accountability;

4. The Norms Set Out By It For The Discharge Of Its Functions;

5. Information Regarding The Rules, Regulations, Instructions, Manuals And Records Used
By Its Employees For The Discharge Of Its Functions;

6. A Statement Of The Categories Of The Documents Hold By It Or Under Its Control;

7. Information Regarding Any Arrangement That Exists For Consultation Or Representation

By Member Of The Public, In Relation To The Formulation Of Policy And Implementation;

8. Advice Given By the Boards, Councils, Committees And Other Bodies Consisting Of
Two Or More Persons. Additional Information As To Whether The Meetings Of These Are
Open To The Public Or The Minutes Of Such Meetings Are Accessible To The Public;

9. A Directory Of Its Officers And Employees;

10. The Monthly Remuneration Received By Each Of Its Officers And Employees, Including
The System Of Compensation As Provided In Its Regulations;

11. The Budget Alloted To Each Of Its Agency Indicating The Particulars Of All Plans,
Proposed Expenditure And Reports On Disbursement Made;

12. Detailas Of The Expenditure Of Subsidy Programmes, Including The Amounts Allocated
And The Details And Beneficiaries Of Such Programme;

13. Particulars Of Receipients Of Concessions, Permits Or Authorisations Granted By It;

14. Details Of Information Available To Or Held By It, Reduced In An Electronic Form;

15. The Particulars Of Facilities Available To Citizens For Obtaining Information, Including
The Working Hours Of A Lbirary Or Reading Room Of Maintained For Public Use;

16. The Names, Designation And Other Particulars Of The Public Information Officers;

17. Such Information As May Be Prescribed.

About Tea Boardbout ea Board

Tea is one of the industries, which by an Act of Parliament comes under the control of the
Union Govt. The genesis of the Tea Board India dates back to 1903 when the Indian Tea Cess
Bill was passed. The Bill provided for levying a cess on tea exports - the proceeds of which
were to be used for the promotion of Indian tea both within and outside India. The present Tea
Board set up under section 4 of the Tea Act 1953 was constituted on 1st April 1954. It has
succeeded the Central Tea Board and the Indian Tea Licencing Committee which functioned
respectively under the Central Tea Board Act, 1949 and the Indian Tea Control Act, 1938
which were repealed. The activities of the two previous bodies had been confined largely to
regulation of tea cultivation and export of tea as required by the International Tea Agreement
then in force, and promotion of tea Consumption.

TEA BOARD- ORGANISATION AND FUNCTIONS

1. Organisation of the Board: The present Tea Board is functioning as a statutory body of the
Central Government under the Ministry of Commerce. The Board is constituted of 31 members
(including Chairman) drawn from Members of Parliament, tea producers, tea traders, tea
brokers, consumers, and representatives of Governments from the principal tea producing
states, and trade unions . The Board is reconstituted every three years.

The following are the standing committees of the Board :

(i)ExecutiveCommittee
(ii)ExportPromotionCommittee
(iii)LabourWelfareCommittee
(iv) Development Committee.

The Executive Committee deals with the administrative matters of the Board.

The Export Promotion Committee deals with the work in relation to the export promotion of
tea.

Labour Welfare Committee guides the Board in implementation of various welfare schemes for
the benefit of the plantation workers and their wards.
The Development Committee is responsible for overseeing the various developmental schemes
run by the Board.

2. Administrative Set-up: The functional activities of the Board's Head Office located in
Kolkata, West Bengal are as under :

a) The Secretariat headed by Secretary looks after Establishment / administrative works and
co-ordinates with the various departments of the Board’s office.

b) The Establishment branch headed by Assistant Secretary looks after administrative / policy
matter and deal with the staff matter of the Board’s office.

c) The Finance wing headed by Financial Advisor and Chief Accounts Officer is responsible
for the maintenance of accounts, release of financial assistance to tea gardens and internal
audit.

d) The Development Directorate headed by the Director of Tea Development is responsible for
formulation and implementation of various developmental schemes and rendering assistance to
the industry in the procurement, distribution and movement of essential inputs.

e) The Promotion Directorate headed by the Director of Tea Promotion looks after the works
relating to Marketing and Promotion of tea in India and abroad.

f) The Research Directorate headed by the Director of Research is responsible for co-
ordination of tea research carried out by the different tea research institutions in the country
and monitoring the functions the Tea Board's own Research Station.

g) The Licensing Department headed by the Controller of licensing is responsible for issue of
business licences for tea exporters and distributors, recording the ownership of all tea gardens
in India and implementation of the Tea Waste (control) Order and Tea Warehousing (control)
Order.

h) The Labour Welfare Department headed by Welfare Liaison Officer(North) looks after the
work relating to implementation of welfare schemes of the Board.

i) The Statistics Department headed by the Statistician is responsible for the collection of
Statistics relating to tea area production, tea prices, export, import, labour and all other related
data and carrying out techno-economic surveys of various tea growing areas in the country
including cost studies.

j) The Law Cell headed by Law Officer looks after all legal matters arising in various
functional departments mentioned above.

k) Hindi Cell headed by the Deputy Director(Hindi) is responsible for the implementation of
the provisions of Official Languages Act and various related measures.
l) Vigilance Cell: Tea Board's Vigilance Cell is headed by the Deputy Chairman of the Board
who has been appointed as the Chief Vigilance Officer of the Board by the Central Vigilance
Commission. The Cell engages itself with surveillance and preventive vigilance, in addition to
taking appropriate action in matters arising out of information / complaints. The Cell attends to
queries of the Government of India and the Central Vigilance Commission as and when such
queries are received. Monthly and Quarterly Reports are prepared and sent to the Ministry of
Commerce and the Central Vigilance Commission. The overall vigilance activities are looked
after by the Chief Vigilance Officer who is assisted by the Vigilance officer

3. Functions: The Tea Board has wide functions and responsibilities under the direction of
the Central Government. Briefly the primary functions of the Tea Board are as under :

a) Rendering financial and technical assistance for cultivation, manufacture and marketing of
tea.

b) Export Promotion

c) Aiding Research and Development activities for augmentation of tea production and
improvement of tea quality.

d) Extend financial assistance in a limited way to the plantation workers and their wards
through labour welfare schemes.

e) To encourage and assist both financially and technically the unorganised small growers
sector.

f) Collection and maintenance of Statistical data and publication

g) Such other activities as are assigned from time to time by the Central Government.

4. Funds for the aforesaid functions are made available to the Board by the Government
through Plan and Non-Plan Budgetary allocations.

The Plan funds are being used exclusively for the activities mentioned at (a) above. Funds for
all other activities mentioned above (F and g) are met from Non-Plan Budget allocation for
which cess levied on tea is the major source.

Tea Cess is levied on all teas produced in India under Section 25(1) of the Tea Act, 1953. The
said Act provides for levying cess upto 50 paise per kilogram of tea produced in India.
Currently, however, the cess is collected at the rate of 30 paise per kg. excepting Darjeeling
teas for which only 12 paise is levied. The Cess at present is collected by the Central Excise
Department and credited to the Consolidated Fund of India after deducting the expenses of
collection. Funds are released by the Central Government in favour of Tea Board from time to
time on the basis of the sanctioned budget after due appropriation by the Parliament. Such
funds received by the Board are being utilised for meeting the non-plan expenditure.
Plan Funds: Funds are provided under the plan budget with the prior approval of Planning
Commission and EFC for implementing various developments, promotional and R& D
schemes.

5. Offices of Tea Board :

(a) Offices in India: With Head Office located in Kolkata, West Bengal it has nineteen offices
which include Zonal, Regional and Sub-Regional Offices located at the following
cities/towns :

Coonoor Guwahati New Delhi

Siliguri Mumbai Kochi

Coimbatore Silchar Kottayam

Agartala Jorhat Tezpur

Kurseong Palampur Jalpaiguri

Dibrugarh Gudalur Kumily

It also maintains four Tea Bar/Buffets.

(b) Foreign Offices: Currently Tea Board has three overseas offices located at London, Dubai,
and Moscow. (The fourth and fifth office at Hamburg and New York was recently closed
down). All these foreign offices of the Board are designed to undertake the various
promotional measures to boost up export of Indian tea. These offices also act as a liaison office
for interaction between importers of Indian tea of the respective regions as well as Indian
Exporters.

6. Staff Strength: The staff position of the Board as on 31st March 2012

Group Number of Staffs

A 47
B 163

C 209

D 177

Total 596
ROLE OF CAS IN TEA INDUSTRY
1)Establishes an effective accounting system adapted to the company.

2) Careful analysis of accounts of Tea industry

3) Creation of transitional situation

4) The review of accounting records

5) Implementation on management accounting

6) The preparation of annual accounts

7) The preparation of budget evaluations

8) The establishment of a cost accounting

9) Dealing with Investment projects and budget control

10) Help with cash management, examining the funding trend in the market and building
relationships with financial institution

11) Manages the Taxation process of a company

12) Preparation of all tax returns

With globalization, the role of a Charted Accountant has become more and more important.
Hence, they are the most demanded professionals in any industry. At this point, when there are
an increasing number of companies and organizations coming up everyday, one can realize the
importance of a Charted Accountant in an organization. He is the one who performs multiple
tasks for a company, reducing its losses and increasing its profits. Furthermore, the benefits
that your business receives from the services of Chartered Accountants are too much as
compared to the inadequate salary offered to them.

Income from the manufacture of tea.

Rule 8 under income tax act

8. (1) Income derived from the sale of tea grown and manufactured by the seller in India shall
be computed as if it were income derived from business, and forty per cent of such income
shall be deemed to be income liable to tax.

(2) In computing such income an allowance shall be made in respect of the cost of planting
bushes in replacement of bushes that have died or become permanently useless in an area
already planted, if such area has not previously been abandoned and for the purpose of
determining such cost, no deduction shall be made in respect of the amount of any subsidy
which, under the provisions of clause (30) of section 10, is not includible in the total income.

Risk Management

1) Labour Problems
Many tea gardens particularly in the Northwest India are facing closure as a result of low
productivity, high cost of production and declining prices. Economically, these gardens are simply
not sustainable. Labour have not been paid wages and other dues under the Plantation Labour Act
for several months. In the foothills of the Himalayas, in Dooars in West Bengal, a major tea
producing area, 14 tea gardens are already closed. At least 17,000 workers are jobless and the state
government has admitted 571 deaths in the past 15 months. The Government has announced a
Rs.1,190 crore package which will be given over a 15 year period and used to enhance
productivity, including the replantation of tea bushes in the plains and rejuvenation of gardens in
the hills. This will be out of a Rs.500 crore budget earmarked in the fiscal year 2007-8 for
rehabilitation and replanting of the tea plantation sector. The Government has also provided
financial help in the earlier years but not much has improved.
In some cases the government is also considering the option of taking over the closed tea gardens
and handing them over to new owners, under a provision in the Tea Act that has never been used
till now.
Most of the Government support is directed towards the tea plantations. So how much of that
actually benefits the plantation labour directly is a question mark? The answer is right there in the
continuous agitations and unrest among the tea plantation labour. In the context of the globalizing
Indian economy, even the talk of the Government taking over sick tea plantations is a regressive
step.
2) Low Profitability in Production
The corporates like Tata Tea have mostly got out of plantations. They realized that there is more
money to be made in marketing and the risk in that is much lower although the cost of market
development is quite high.
The production entails risk on account of weather conditions and falling prices. Labour cost is quite
high since hand picking of tea is quite labour intensive. To reduce the cost, some plantations are
resorting to longer picking cycles; say 15 to 18 days against the ideal 10 days. On top of this, they
are also harvesting three or even four leave and a bud disregarding that the tea manufactured would
be of poor quality and fetch low prices. The ideal is two leaves and a bud.
The high cost of fulfilling social obligations towards the plantation labour is another reason for the
Corporates to get out of the plantations.
It is not that the plantations simply do not offer prospects for profit. Some companies, like
Williamson Magor, do make money and have survived through even the most difficult periods.
They have the experience, efficient plantation management systems in place, and principals sitting
in the key markets.

RISK MANAGEMENT TOOLS

Over the past two decades, the trade of agricultural commodities has evolved from spot
markets where the commodity is transferred from seller to buyer immediately after the two
parties agree on a price, to other various forms, the most popular being forward and futures
markets. Trading in these markets occurs when participants can find commodity price
information for a future date and lock in on these prices for future delivery. The contracts or
transactions in these markets are commonly known as risk management tools.

3. The advantage of using risk management tools is that users can hedge their price risks.
These tools transfer risks from the market participant who is averse to risks to those who seek
risks, such as the speculator. These tools have been used by governments, traders, and in some
cases producers, to deal with price uncertainties in other commodity markets, including those
for coffee, cocoa and sugar. Experience shows that when used appropriately, risk management
tools allow users to deal with price risks effectively.

RELEVANCE FOR THE TEA TRADE

The forward contract is the only risk management tool currently used in the tea trade. Forward
contracts help deal with price risks but they are less flexible than other risk management tools.
Since the risk is shared only between the seller and buyer, a gain from price movement to one
party is a loss to the other.

In general, the development of a standardized risk management market requires transparent

prices, low basis risks and enough liquidity. Prices of tea are fairly transparent since they are
set at well-organized auctions. However, uncertainties remain in terms of basis risks and
liquidity. Basis risk arises when the design of standardized contracts traded in the international
markets is too generalized and does not reflect local needs. Liquidity depends on the numbers
of traders and investors willing to participate in the market. An increasing volume of the trade
in value added teas indicates that the market has became increasingly diversified.
Diversification could contribute to lower liquidity and higher basis risks, but OTC markets can
reduce basis risks and liquidity problems by customizing contracts.

Developing new risk management products suitable for tea requires dealing with not only
technical aspects but also commodity specific aspects or those related to local conditions.
Among the commodity-specific aspects for tea trade is the short time period covered by risk
management tools (likely to be less than six months), while effective hedging strategies are
usually longer-term.

SWOT Analysis
Strengths
1) The diverse agro‐climatic conditions prevailing in the tea growing areas of India lend
themselves to the production of a wide range of teas – black, (CTC, orthodox), green teas and
organic teas.
2) A one‐stop‐shop for high quality specialty teas e.g. Darjeeling, Assam, orthodox, high range
Nilgiris, etc.
3) Strong production base with 75 per cent of the production being accounted for by organised
sector covering 1,600 gardens owned by nearly 1,100 entities.
4) Competent managerial manpower.
5) Strong research backing from well established research institutions.
6) Availability of modernized and upgraded manufacturing facilities.
7) Labour welfare laws protecting workmen.
8) Emerging small grower sector with young plantation profiles.
9) Availability of training facilities for plantation managers, supervisory staff and workers for
continuous up gradation of their skills.

Weaknesses

1) Old age of the tea bushes – nearly 38 per cent have crossed the economic threshold age limit
of 50 years and another 10 per cent on the verge of crossing this limit shortly.
2) High cost of production mainly due to low productivity, high energy cost and high social
cost burden.
3) Diminishing availability of workforce particularly in South India.
4) Remote location of the plantations and transportation of teas over long distances from tea
gardens to sale points.
5) Poor infrastructure – approach roads to gardens, inadequate warehousing at ports,
constrained

availability of containers, placements of vessels and high

ocean freight charges (due to feeder–mother vessel transfers).
6) Difficulties in introduction of mechanization of field operations due to topographical and
quality limitations.
7) Unorganized nature of small growers with fragmented small and scattered holdings leading
to
production of poor quality teas mainly due to non‐availability of technical know‐how at the
doorstep – weak extension service.
8) Lack of quality monitoring mechanism for teas particularly sold through private sales.
Opportunities
1) Good awareness level world over as to the health attributes of tea leading to growing
demand for good quality teas and specialty teas such as organic teas, green teas.
2) Narrowing down of the gap between supply and demand due to increased growth rate of
consumption in the major producing countries.
3) Producing countries reaching an agreement for forming an exclusive forum for resolving
their
differences over common issues.
4) Positive response by the tea industry responding to the Government towards renovation of
fields and processing factories. (Special purpose tea fund and quality up gradation initiative).

Threats
1) Round‐the‐year production in countries such as Sri Lanka, Vietnam.
2) Low cost of production of teas from Kenya, Vietnam and Indonesia etc.
3) Younger age of bushes (better quality of tea) of other producing countries.
4) Consistency in quality commitment and high service quality perception of
a. exporters of other countries.
5) Better developed packaging and bagging capacity of Sri Lanka.

Growth Strategy

INDIAN TEA INDUSTRY AT A GLANCE IN 2011 - 2012

The total turnover of the tea industry in India is likely to touch Rs 33,000 crore by 2015 from
the current level of about Rs 19,500 crore, as per the industry body ASSOCHAM.

With nearly six lakh hectares area under tea cultivation, the domestic tea industry is growing at
a compound annual growth rate (CAGR) of about 15 per cent. India is the world’s largest
consumer, second largest producer and fourth largest exporter of tea after China and accounts
for nearly 30 per cent of global output and nearly 25 per cent of tea produced worldwide is
consumed in India .

Branded tea market accounts for nearly 55 per cent of the total market and is growing at about
20 per cent while the unbranded market is growing at 10 per cent annually.

Nearly 35 lakh workers are employed in over 1,500 tea estates across India and about 65 per
cent of these are employed indirectly. According to an ASSOCHAM estimate, the tea
production during the current year is likely to stay over 950 million kg as against 966.4 million
kg in 2010.
Market Growth Rate

1990-91-1996-97 1.30%

1996-97-2001-02 2.70%

2001-02-2006-07 2.20%

2004-05-2009-10 1.80%
2009-10-2014-15 2.00%

The total turnover of the Tea industry in India is likely to touch Rs 33,000 crore by 2015
from the current level of about Rs 19,500 crore, With nearly six lakh hectares area under
tea cultivation, the domestic tea industry is growing at a compound annual growth rate
(CAGR) of about 15 per cent,
India is world’s largest consumer, second largest producer and fourth largest exporter of
tea after China and accounts for nearly 30 per cent of global output and nearly 25 per
cent of tea produced worldwide is consumed in India .Branded market accounts for
nearly 55 per cent of the total market and is growing at about 20 per cent while the
unbranded market is growing at 10 per cent annually. Nearly 35 lakh workers are
employed in over 1,500 tea estates across India and about 65 per cent of these are
employed indirectly.

he tea production during the current year is likely to stay over 950 million kg as against 966.4
million kg in 2010.

“Awareness about health benefits associated with moderate intake of tea is another significant
factor behind this upsurge in its demand as now more and more people are familiar with
healing properties of tea.

Historically regarded as a hot beverage, the penetration of tea in the non-alcoholic cold
beverage segment is another driving force for this industry owing to the rising affinity
towards ice-tea which currently accounts for over five per cent of entire non-alcoholic
beverage market in India. There is not much product differentiation at rural and urban
levels and thus key industry players are coming out with value added products but with
rapidly changing market scenario and technological advancement in agri-business, there
is tremendous scope and potential for growth and development of domestic tea industry

The Indian tea industry is presently facing tough competition from China, Sri Lanka, United
Kingdom, Kenya and Japan.

Hindustan Unilever is the current market leader in terms of sales value with over 20 per cent
market share; while Tata Tea is the leader in terms of sales volume with nearly 20 per cent
market share.