Tea industry passing through acute financial crisis: ITA status paper

Indian Tea Association (ITA), the leading body of tea planters, Thursday said that the industry is passing through a phase of acute financial crisis with prices not keeping pace with the rising costs of production.

The ITA in its status paper 'Tea scenario 2023' said while tea prices increased at a compounded annual growth rate (CAGR) of around four per cent over the last decade, costs of vital inputs like coal and gas among others grew at a CAGR of nine per cent to 15 per cent during the same period.

Besides, the exponential increase in production following the emergence of small tea growers resulted in surplus teas remaining in the system as domestic consumption and exports have not grown to absorb it, the status paper said.

On the price trends of the beverage during the current fiscal, it said tea prices declined alarmingly in 2023 compared to 2022. The auction prices of CTC and dust teas covering sale numbers 14 to 39 are down by Rs 12.49 per kilogram for Assam tea and Rs 11.30 per kilogram for tea from West Bengal. Auction prices for the orthodox variety are also down by Rs 95 per kilogram covering the same sale numbers.

The ITA status paper said that while in 2022 tea exports showed some signs of revival and touched 231 million kg, it wass down by 2.61 million kg during January to July in 2023.

The export scenario remains grim as shipments to Iran are uncertain. The Iran market constitutes nearly 20 per cent of total tea exports from India and the decline in offtake is due to the payments issues causing financial stress to the exporters, it said.

To mitigate the high exports costs and enable the exporters to remain competitive, the industry has urged the government to consider enhancing RoDTEP (remission of duties or taxes on export products) incentive cap for high quality CTC, orthodox and Darjeeling teas.