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Indian Tea Industry In Doldrums, Slow Recovery Ahead

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For the  Indian tea industry, these are troubled times. 

In addition to shrinking exports, there is the massive production loss in the corona pandemic period of around 130   /140 million kilos: estimated financial loss Rs 2100 crore.

The silver lining is that with nearly all the resident workers resuming duty at Darjeeling and other North Bengal plantations, both production from and maintenance of the existing plants will get underway. 

More importantly,  the tea growers’ association has drawn up an alternate growth plan keeping in view the unforeseen problems resulting from a  prolonged crisis.  The comforting assurance of a strong domestic demand is an added sweetener.  

Their remedy: to  step up the supply of more quality  tea within the country which in time should lead to a  more robust demand.  Hopefully, over a period of time in the medium term, the losses  recorded in the post covid 19 pandemic period can be made up. Coupled with some concessions/relief from the  Union Commerce  Ministry, the industry should not suffer too much in the long run—this is the broad sentiment of the  more optimistic industry bosses .

Efforts to secure such relief have already  brought  dividends. The  Assam Government  has announced  a series of measures  for the  troubled industry .     Assam media  report that  there would be a Rs 7  per kilo subsidy for the production of some orthodox varieties, a 3% subvention on all term loans and a withdrawal of agricultural income tax for 3 years.  Producers feel that more relief for the production of orthodox varies should result in both increased domestic as well as foreign sales.

There is also fresh hope with renewed interest in the second flush of Assam varieties from buyers in  Russia, Iran , the UAE and the EU countries, according to reports from Guwahati. .  

Because of social distancing, and running  plantations with  skeleton staff, overall production was down by a massive 65% during  March/April 2020. By May it was still around 50%, in Assam and   north Bengal  gardens. Indian Tea Association(ITA) sources say  that all these months, the shortfall of workers/staff ranged between 20% to 50%   in the North Indian (Assam and Bengal) plantations. In Kerala  and the Nilgiris  down  South,  almost 50% workers  stayed away from work  for one reason or another.

Meanwhile Tea Board circles  have  a scheme to promote and increase domestic sales, to offset partially the marginal drop in exports. Intriguingly, the export of 248.29 mkgs of Indian tea  in 2019, as against 256.06 mkgs the year before, did not hurt industry financially,  as  the sale of higher quality teas ensured more forex earnings. However, the drop in demand from Pakistan, Sri Lanka, and Bangladesh nearer home  , added to  the lack of sizable  orders from the UK, Egypt and the UAE last year certainly caused soms concern.

Board officials propose to carry out special campaigns in a few states to encourage greater consumption especially of quality tea among the people. Starting from Odisha, the campaign would  cover Gujarat, Rajasthan , Bihar and Uttar Pradesh. The accent would be on explaining at the mass level the health benefits  of  cultivated tea drinking and  the  consumerist  pleasure  of imbibing high quality brews.  There is also a proposal to push for more sale of orthodox varieties   vis-a-vis   traditional CTC  items .

Board insiders estimate that additional  domestic sales of around 30  to 50  mkgs in the months ahead should restore much of the  stability to the industry, buffeted  by strong headwinds on the post covid pandemic situation.

Not everyone agrees. One market analyst wondered whether there was much scope for increasing domestic  sales through specific campaigns. He felt that the problem with tea sales in India was the relative lack of popularity  of tea with the educated, employed youths  who seemed to prefer coffee or even soft  fizzy drinks.   In contrast,  the number of relatively older people who could be persuaded

to   drink more green tea for health reasons or otherwise was much lower, he felt.  Added to this was the fear among some industry bosses that the lack of exports could lead to  a problem of overproduction and  consequently lower prices, at home.

The total production of tea in India in 2019 was around 1400 mkgs, sources said.

(Ashis Biswas, veteran journalist and commentator, is now News Editor of Easternlink)

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