India is the second-largest producer and the third-largest exporter of tea in the world. In 2019, India exported almost 250 million kg of tea, and according to the Directorate General of Foreign Trade (DGFT), this was worth nearly US$ 872 Million. Exports constituted 91% black tea, 2% green tea, and 7% tea preparations like instant tea.
However, India’s tea exports started declining at a CAGR of -1% during 2011-2020, even before covid-19 added to its misery. When the pandemic hit the nation, India’s tea exports fell by 14%. Moreover, the numerous lockdowns led to a fall of 69% in the overall exports of tea Y-o-Y in April 2020, the month when the first flush (harvest) is ready for export.
Our 2021 research report on Tea Exports suggests that one of the main reasons for the decline in the overall tea exports of the country can be attributed to the scarcity of variety in India’s product mix and the failure to tap into the increasingly popular green tea market. More green tea exports could prove to be beneficial to India given the 14% higher average export price it enjoys over black tea globally.
The Indian state of Assam is the largest tea-growing region globally, and it is also the largest exporter of tea in India with 40% of the country’s overall tea exports. Other top tea exporting states in India include West Bengal, famous for its Darjeeling tea, and the southern states of Tamil Nadu and Kerala.
However, interestingly, according to S&P Global Portal, Gujarat-- a semi-arid state where there are no tea plantations exported US$ 24 million worth of tea in FY 2019-20. Top tea export companies in India and several small and medium manufacturers process and export tea from Gujarat, thus helping this western state garner popularity in the tea sector and potentially become a tea export hub.
Iran is the largest export destination for Indian tea by a margin of 26%. In 2019, India exported US$ 227 million worth of tea to Iran despite the rising geopolitical tensions in the regions. With Sri Lanka giving India close competition to acquire a significant share in Iran, we believe it is time for exporters to leverage this market further. Tea export from India to Russia stood second at US$ 106 million in the year 2019. Other tea importing countries from India include the United States, UK, and the UAE.
Although the UK, the country that introduced tea in India, remains one of the top five export destinations, tea exports to this country saw a decline of 8% CAGR for the five years, ending 2019. Over the years, the UK has started importing more tea from India’s main rival in tea export-- Kenya.
We observed another interesting trend in the upcoming market for Ready-to-Drink tea and the shift towards the more accessible and convenient to use smaller packages. Drip’s study revealed that India’s black tea exports in bulk packings have declined by 9% (annual rate) over the last decade, whereas the same exported in three to 20 kgs small packings has witnessed a 46% yearly growth rate. This is something the Indian tea exporters should consider going forward.
Download the full report here.
All data as of 2019
18% of 1390 million kg of tea produced in India was exported abroad. (Source: Tea Board India)
China is the largest exporter, followed by Kenya, India, and Sri Lanka. (Source: Food and Agriculture Organization Statistics)
Iran was the largest importer of Indian Tea. (Source: Directorate General of Foreign Trade)
Assam is the largest, followed by West Bengal. (Source: Directorate General of Commercial Intelligence and Statistics)
India is the second-largest producer of tea in the world. The first is China. (Source: Food and Agriculture Organization Statistics)
There are eight well-known varieties of tea in India. These are Darjeeling, Assam, Nilgiri, Kangra, Dooars-Terai, Tripura, Masala, and Sikkim Tea. (Source: Tea Board India)