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Introduction

1.1. Background of tea
Tea is indigenous to India and is an area where the country can take a lot of pride. This is mainly because of its pre-eminence as a foreign exchange earner and its contributions to the country's GNP. In all aspects of tea production, consumption and export, India has emerged to be the world leader, mainly because it accounts for 31% of global production. It is perhaps the only industry where India has retained its leadership over the last 150 years. Tea production in India has a very interesting history to it. The range of tea offered by India - from the original Orthodox to CTC and Green Tea, from the aroma and flavour of Darjeeling Tea to the strong Assam and Nilgiri Tea- remains unparalleled in the world.

Here are some statistical facts about the Indian Tea Industry:

• The total turnover of the tea industry is around Rs. 10,000 crores.
• Since independence tea production has grown over 250%, while land area has just grown by 40%.
• There has been a considerable increase in export too in the past few years.
• Total net foreign exchange earned per annum is around Rs. 1847 crores.
• The labour intensive tea industry directly employs over 1.1 million workers and generates income for another 10 million people approximately. Women constitute 50% of the workforce.

The Indian tea industry is in a consolidation phase. Most branded tea players owning plantations have been looking at divesting their plantation so as to focus on branding and marketing. India continues to be the world’s largest producer and consumer of tea. Domestic productions as well as exports have been on a rise. However, due to stiff competition from countries like Sri Lanka, Kenya, China, Bangladesh and Indonesia, and issues of quality, realizations on Indian teas have been witnessing a downward trend.

India’s tea production increased by 17.7% yoy to 149.8mn kg during Jan-Apr 2005. Production in both the northern (up 23.7%) and southern (up 8.8%) regions witnessed an upward trend. During the same period, total tea exports from India in volume terms grew by 7.5% yoy to 149.8mn kg. Exports from southern region grew sharply by 25.4% yoy however, northern region registered a degrowth of 12.6% yoy in tea exports. Domestic prices (Kolkata auctions) during May 2005 registered a decline of 5.6% yoy (8.9% mom) to Rs72.9 per kg from Rs77.2 per kg in May 2004.

Tea production and exports

Table 1: Source: Indian Tea Association


Exports
India is the largest producer of tea and ranks fourth in terms of total tea exporters in the world. Total world tea exports grew by 4.4% yoy to 230.2mn kg during Jan-Apr 2005. Indian exports in value terms grew by 7.8% yoy to Rs. 4.6bn during Jan-Apr 2005. Exports from Southern region registered a strong growth of 26.9% yoy at Rs. 2.1bn while exports from Northern region declined by 4.7% yoy to RS2.4bn.

Table 2: Source: Indian Tea Association

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