Tea sector grappling with acute financial stress: ITA Chairman Bangur

With prices down and costs up, ITA's Hemant Bangur warns of viability risks for tea estates and urges a minimum sustainable price to stabilise the sector

Around 80 per cent of organised tea estates reported cash losses last year, and 2025 has brought a further decline in prices, triggering negative EBITDA margins for most estates, according to Hemant Bangur, chairman of the Indian Tea Association (ITA).

 

Bangur highlighted the “unviable” state of commercial operations faced by organised sector estates at the association’s annual general meeting (AGM) on Thursday evening.

 

“Operating margins have declined 60.2 per cent between 2020 and 2024, while cash wages during this span increased 49.7 per cent in Assam and Bengal,” he said.

 

“Consequent to the decline in prices this year, only a handful of estates will achieve positive EBITDA, thus eroding the industry’s financial foundations further,” Bangur added. 

 

He warned that the situation threatens the long-term viability, investment capacity, and workforce stability of the sector.

 

Problem of plenty

 

The sector’s challenges are compounded by shrinking margins and a global production surplus that has led to price stagnation.

 

Global tea production surged by 352 million kg to 7,053 million kg (mkg) in 2024, with China contributing the most. “The global surplus last year was a staggering 418 mkg. India’s tea production at 1,304 mkg last year was down by 90 mkg from 2023,” Bangur said.

 

However, he noted that 2025 had brought headwinds, with India’s production higher by 77 mkg as of July, signalling a likely surplus by year-end.

 

This has been reflected in auction prices. “Data released up to August 2025 reflect North India tea prices falling by ₹16.87 per kg — well below the realisation range of last year. This precipitous decline at auctions across the board — down by over 7.6 per cent — threatens viability and livelihoods,” Bangur said.

 

Call for a minimum sustainable price

 

Reiterating the industry’s long-standing demand, the ITA chairman urged the government to consider a minimum sustainable price to ensure fair returns for producers.

 

Assam Chief Secretary Ravi Kota acknowledged that average auction prices, especially in North India, had come under pressure, adding that low-cost imports from Nepal and Kenya had created additional stress.

 

On the issue of a minimum floor price, however, Kota said, “The question is not whether it is required or not. But implementing such a price in tea is far more complex than in a normal field crop like paddy, jute, or sugarcane.”

 

Assam accounts for nearly 50 per cent of India’s total tea production.

 

Big growers, small growers and cost disparity

 

Both Bangur and Kota highlighted the structural shift in India’s tea industry, with the small growers’ segment now contributing around 54 per cent of total production.

 

A level playing field, they said, could help narrow the cost disparity between organised estates and smallholders. Bangur pointed out that organised sector estates are burdened with statutory obligations and social welfare costs, while small growers operate outside this framework.

 

“Large estates operate under the Plantation Labour Act and other regulatory responsibilities, shouldering obligations such as housing, healthcare, and education. Small growers operate outside this framework,” Kota said.

 

“This has created a cost differential that the market does not fully recognise. The goal should not be to make both sides identical but to ensure that both are viable and can coexist without undercutting each other,” he added.