The tea industry in India is quite a big industry. In terms of employees, the industry provides jobs to 3 million people in which there are 50% are women, in which 1.2 million are directly employed. Tea brands and supermarkets capture over two-thirds of the price paid by consumers for tea in India with just 7% remaining for workers of estates.
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.
But what’s the reason that the industry is gasping for survival? the industry’s going through a crisis since 1993 due to a lack of governmental support. Many owners have closed their tea industry, and others are on the brink of closure. The recent decrease in demand for tea has led to the dip in tea prices making the production costlier. We’ll discuss it further but first, let’s take a look at the market and the history of this sector.
The industry is about 172 years old in Assam, occupies an important place and a very useful part of the national economy. Originally tea is indigenous to the Eastern and Northern parts of India, but the sector 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, tea production in India has increased by 250% and the land area used for production has increased by 40%. Securing its top position after China, India is one of the biggest producer and consumer of tea.
In 2008 production was 802 M.Kgs or about 82% of the total production of 981 M.Kgs of tea went for domestic consumption. Such a massive increase in domestic consumption has been due to an increase in population, greater urbanization, an increase in income and standard of living, etc.
According to the market research, Total Tea exports stood at US$ 837.33 million in 2017-18, as compared to US$ 731.25 million during the previous year. Between Apr-Oct 2018, tea exports have reached US$ 463.95 million. But what’s the reason that most of the states in India are gradually moving away from their conventional agricultural-based economy towards a secondary or service-oriented economy, but Assam is still laboriously reliant on the agricultural sector.
Compared to most other states in India, it is considered as less flourish state which depicts a dingy picture of the economic condition of Assam. The Assam tea industry is reeling under cost pressures due to price stagnation, increasing labor and other production costs, a mismatch between demand-supply, high transaction costs, challenges for fair price discovery at the auctions and climate change problem.
The price too, of the tea, has seen a steady decline over the years while Changing climatic conditions owing to scanty or very heavy rainfall have severely affected the tea industry and its production. Also, the declining health of a growing population puts a severe strain on the resources of the plantation companies and has a knock-on effect on the productivity and profitability of the overall businesses. On the other hand, there is not any proper strategy on the Assam tea industry by the state & as well as central govt. It might also be hampering this industry.
There are a lot of factors that can help Assam to reclaim its spot but govt. should think about management programs with the intent of improving Assam’s tea industry’s performance, this initiative could lead businesses to regain their confidence as well as to control the structure, process, and procedure in order to change the performance objectives. Also, we should take some initiatives to promote exporting to the other countries and support the domestic market promotion.
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