The Tea Industry must address climate vulnerability, price realization, and regulation of small growers

India's tea industry today stands at a crossroads.

- Kishore Kumar Biswas

Producers’ associations such as the Indian Tea Association (ITA) and the Tea Association of India (TAI) have raised concerns about the declining dynamism of the sector. Several factors contribute to this trend.

Climate and Production Challenges

One of the foremost challenges is the uncertainty in production volumes, primarily caused by erratic weather conditions. Extreme heat in May 2024, followed by severe floods in Assam, led to a sharp fall in tea production—down 30% to 90.92 million kg, the lowest in more than a decade.

India remains the second-largest tea producer in the world, after China. In 2024, India’s total tea production reached 1,285 million kg, an 8% (or 109 million kg) increase over 2023. From January to July 2025, production stood at 641.44 million kg, about 14% higher than the same period last year.

However, while production has been growing at around 4% annually, domestic demand has increased by only 2%, resulting in an emerging supply-demand imbalance.

Price Stagnation and Domestic Dependence

Price stagnation, particularly in Assam—which contributes roughly 55% of India’s total tea output—has become a serious concern. A unique feature of the Indian tea industry is its heavy domestic dependence: about 80% of Indian tea is consumed within the country. This contrasts sharply with nations like Kenya, which exports nearly all of its tea production, making it the world’s largest tea exporter, followed by China. India ranks third globally in tea exports.

Rising Costs and Climate Suitability