India to draw 7-year strategic plan for tea industry

"The strategy will focus on production enhancement through re-plantation, rejuvenation, pruning and infilling, higher productivity in small tea gardens, capacity expansion of green leaf output by augmenting factories through modernisation and new plants," said Sen.

Though India is the world's second largest producer of tea (979 million kg in 2009) after China (1,310 million kg), it ranks 11th in per capita consumption at a modest 700gm per annum.

"With inputs from tea associations and other stakeholders, we are drawing an ambitious vision, with outcome goals and targets for each year," Sen said on the margins of the 117th annual conference of the United Planters' Association of Southern India (Upasi), which concluded on Tuesday.

With 75-80 percent of the produce consumed in the domestic market, India faces stiff competition from smaller countries like Sri Lanka, Vietnam and Kenya for a fair share of the global pie in export markets.

"The industry will have to go for product diversification and dual manufacturing facilities for Orthodox and CTC (crush, tear and curl) tea, explore value addition and production of instant tea, decaffeinated tea and specialty tea," said Sen.

Noting that higher investment in research and development (R&D) and technology transfer were imperative for long-term sustainability and growth, she said to reduce costs across the value chain, planters, producers and intermediaries would have to go for alternative and cost-effective processes, especially in packaging and branding.

"To boost exports in the existing and new markets and regain our share in erstwhile markets such as Russia and Egypt, we are working on branding and promoting Indian tea, especially value-added tea in overseas markets," Sen noted.

In line with the global trends during the recession-hit 2009, the export performance of Indian teas was a mixed bag. Though quantity declined by 14 million kg to 192 million kg from 203 million kg in 2008, the value was higher by Rs.224 crore due to better realisation per unit by Rs.19 per kg. Total value of exports was Rs.2,617 crore as against Rs.2,393 crore in 2008.

With the global economy turning around and international markets becoming active, the export trend in the first seven months of 2010 has been encouraging, as the quantum increased by 14 million kg though value realisation declined by Rs.6.30 per kg to Rs.130/kg from Rs.136.60/kg in 2009.

"Apart from consolidating consumption in the domestic market, which has been facing competition from soft drinks and retail coffee chains, the industry has to gear up to face tougher competition from other countries, which are waiting to enter the lucrative Indian market under Free Trade Agreements (FTAs)," Sen observed.

Besides encouraging organic cultivation and increasing production of green tea, the board is working on special promotional programmes in key countries under the 'Brand India Tea Promotion' to boost exports.

Referring to the mismatch between demand and supply in the domestic market, Sen said in addition to replantation and rejuvenation of age-old plants, the only way the gap could be bridged was by going for vertical growth - increasing productivity, which declined to 1,700kg per hectare from 1,739kg/ha during the last five years.