The Indian tea industry, a cornerstone of the nation's cultural and economic fabric, has experienced notable fluctuations in recent years. In 2024, tea production declined by 7.8%, totalling approximately 1.28 billion kilograms, down from 1.39 billion kilograms in 2023. This reduction is primarily attributed to adverse weather conditions, including heatwaves and floods, particularly in Assam, which accounts for over half of India's tea output.
Production Dynamics
The North-Eastern states, especially Assam and West Bengal, remain pivotal in India's tea cultivation. Assam's production decreased from 688.33 million kilograms in 2023 to 649.84 million kilograms in 2024, largely due to climatic challenges during peak harvesting seasons. Such environmental adversities have not only reduced yields but also escalated production costs for growers.
Market Trends and Economic Impact
Despite the downturn in production, the Indian tea market demonstrated resilience. The reduced supply led to an 18% surge in average tea prices, reaching ₹198.76 per kilogram in 2024. This price increase provided some relief to producers facing higher operational costs.
In terms of market valuation, the Indian tea industry was estimated at $11.5 billion in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 3.1%, reaching $15.0 billion by 2033. This growth is driven by rising consumer demand for premium and specialty teas, increased health consciousness, and the expansion of online retail channels.
Export Performance
India's tea exports have shown positive momentum. Shipments are expected to reach between 240 to 250 million kilograms in 2024, up from approximately 231 million kilograms in the previous year. Key export destinations include Iraq, Iran, Russia, Egypt, and the United Kingdom. The increase in exports is attributed to strategic marketing efforts and a robust risk appetite among merchants, despite geopolitical challenges and currency fluctuations.
Challenges and Sustainability Efforts
The industry faces several challenges, including climate-induced production volatility and rising costs. To combat these issues, there is a growing emphasis on sustainable practices. Initiatives in regions like the Nilgiris involve ecological restoration projects aimed at reviving native forests, which can enhance biodiversity and improve soil health. These efforts not only address environmental concerns but also aim to create a more resilient agricultural ecosystem.
Future Outlook
Looking ahead, the Indian tea industry is poised for steady growth. Factors such as increasing health awareness are boosting demand for green and herbal teas. The market for matcha tea, for instance, generated revenue of $104.0 million in 2024 and is expected to reach $167.8 million by 2030, growing at a CAGR of 8.6%. Additionally, the expansion of e-commerce platforms is making diverse tea products more accessible to consumers nationwide.
Lastly, while the Indian tea industry faces challenges related to climate change and production costs, its inherent resilience, coupled with strategic adaptations and a focus on sustainability, positions it well for future growth. Stakeholders must continue to innovate and embrace sustainable practices to ensure the long-term prosperity of this vital sector.
Why ICC?
Indian Chamber of Commerce (ICC) is the only national Chamber having Head Quarter at Kolkata. Due its strategic geographical location, ICC has always been very active in the tea space of the country. Activities of ICC have always moved in tandem with the checkered growth dynamics of tea sector in the country. ICC has been closely associated with ups and downs of this 170 years old industry, having large number of membership from tea sector.
