According to the Indian Tea Association (ITA), they have asked for a special financial package from the Centre to retain their viability, which is now under serious threat.
The tea industry bodies recently met the Parliamentary Standing Committee on Commerce and submitted a representation on the challenges faced by the sector.
Arijit Raha, the Secretary General of ITA, said that general issues of the industry had been discussed with a special focus on Darjeeling. He said that production of beverages has drastically fallen in Darjeeling, which is from 12 million kilograms to six million kilograms at the moment.
According to him, the reasons for the drop in Darjeeling tea volumes are many, which include no place for expansion of the gardens since they are on hilly terrain and also that replantation is difficult.
Raha said new yield after replantation generally takes a gestation period of five to seven years, and the gardens will earn no revenue during that period. It has become a financial challenge for the industry and also, Darjeeling yields are falling. Since fixed costs are the same for Darjeeling gardens and those in the plains, the cost of production is much higher in the hills.
Above that, prices for Darjeeling tea are falling. Prices have fallen at a 1.7 percent CAGR over the last six years, from 2016 to 2021, according to Raha.
“The Darjeeling tea industry is becoming unviable. Exports also face competition from others. Thus, we sought a financial package from the centre, “he said.
The industry also sought interest rate subventions on working capital loans taken from banks, he added. The other problem faced by the industry is the growing surplus remaining in the system due to stagnant domestic consumption and falling exports.
To raise exports, the industry has sought an increase in the RoDTEP scheme from 1.7 percent to six percent. The industry has also sought the reintroduction of the orthodox tea subsidy needed to raise exports.
The present Russia-Ukraine conflict is also posing a threat since the two CIS nations lift around 18 per cent of total exports from India.