CRISIS IN DARJEELING TREE INDUSTRY

1. Context

Tea Board of India said it had sought a special financial package of Rs 1000 crore from the centre for the tea industry over five years. Tea Board admitted its key brand Darjeeling Tea was under acute stress.

2. Darjeeling Tea

• Darjeeling Tea, called “Champagne Teas” was the first Indian product to get the GI tag in 2004 for its distinct aroma and flavour.
• About 87 gardens in Darjeeling which employ about 55,000 workers produce approximately 7 million kg of tea, most of which is exported.

3. Problems the Industry is facing 

• Tea production in Darjeeling was 10-12 million kg a decade back and now stands at 6.87 million kg in 2021.
• The decline in production is due to climate change, declining yields, and high absenteeism among workers.
• Because of the hilly terrain of Darjeeling, there is no land left for the expansion of tea gardens. The tea bushes are older than other parts of the country.

• Revised Treaty of Trade between India and Nepal in October 2009, both parties had agreed to exempt from basic customs duty, as well as from quantitative restrictions, the import of mutually agreed primary products.
• An easy influx of substandard tea from neighbouring countries especially Nepal is jeopardizing the tea industry of India.
• It is pointed out that inferior quality tea from Nepal was being imported and then sold and re-exported as premium Darjeeling Tea.
• Nepal shares similar climatic conditions and terrain and produces tea at a lower price because of fewer input costs, particularly labour, and fewer quality checks.
• Even though the quality is no match, the tea from Nepal posed a serious challenge.
• From June to September 2017, tea bushes in Darjeeling lay unattended during the agitation called by the Gorkha Janmukti Morcha over the demand for a separate state of Gorkhaland.
• In 2017, the production of Darjeeling tea hit a low of 3.21 million kg. Since a substantial market of Darjeeling tea is exported, exporters switched to cheaper varieties of tea, including the imported variety from Nepal. Tea planters and industry in Darjeeling have not recovered from the damage they incurred in 2017.

• Planters have also complained about the stagnant prices of the auction of Darjeeling Tea, which in 2021 was on average pegged at Rs 365.45 per kg.
• Prices of Darjeeling Tea in the last six years have grown at a CAGR of only 1.7% against an increasing cost of input between 10% and 12% CAGR.

•  In Nov 2021 Tea Board of India issued a notification to restrict the import and distribution of cheap quality tea.
• It asked those who were packaging Darjeeling Tea to indicate on the package if the tea was blended with imported tea, and also give the source of origin of the tea.
• Packers have brought down their purchase of Darjeeling Tea after the notification impacted prices.

4. Way Forward

Restrict the influx of tea from Nepal.

Implement recommendations of the Parliament Standing Committee which are as follows

• Review and revisit the Indo –Nepal Treaty for incorporating stringent requirements for the certificate of origin on tea imports from Nepal.
• Small tea growers should also be recognized as GI –registered producers on par with the 87 tea estates which produce Darjeeling Tea to ensure better price premiums .52% of tea in the country is produced by small tea growers, industry experts called for raising the domestic consumption of tea in India, particularly when exports are not picking up.

For Prelims & Mains