India tea prices firming up, prospects encouraging

By Syed Zarir Hussain, IANS

Guwahati : India's recession-hit tea industry is showing signs of resurgence with prices firming up in the weekly auctions, although scanty rains have led to a slump in production in the first five months of the year as compared to 2006.

Support TwoCircles

"We are fetching good average prices in the weekly auctions with a kilogram of tea being sold at Rs.60 which is about Rs.2.5 higher then what we got last year in the same period between January to May," Dhiraj Kakaty, secretary of the Assam chapter of the Indian Tea Association, said.

India's $1.5 billion tea industry has been in a slump since 1998 with prices and exports plummeting because of weak domestic demand and increased international competition coupled with poor quality teas being produced in the country.

However, last year India produced a record 955 million kg, 27 million kg more than 2005. Exports went up by about 8 million kg to 200 million kg in 2006.

"The reason for hitting good prices at the auctions is mainly due to very good quality tea being produced by India. Maximum stress and care is being taken to produce premium grade teas," Kakaty told IANS.

The northeastern state of Assam is considered the heart of India's tea industry with the state accounting for about 55 percent of the country's total annual tea production.

"There is a production loss of two million kg compared to figures between January and May 2006. The slump in production this year is primarily due to lack of adequate rains across the country," said Kakaty.

In the same period last year, India produced 154 million kg of tea.

India, the world's largest tea grower from plantations in southern, eastern, and northeast highlands, aims to boost the overall exports with the industry body already setting up marketing bureaus in Cairo and Tehran.

"We are getting queries from many countries and we hope to do some good business this year," Kakaty said.

Buoyed by export successes this year, the union commerce ministry will organise an international tea festival here in November.

"We are expecting delegates from Pakistan, Iran, Egypt, the United Arab Emirates and the United Kingdom for the festival that is expected to help improve exports of tea," the official said.

The central government will implement a Rs.50 billion ($1.1 billion) package to help the industry replant tea bushes and boost quality.

"The package is likely to be launched within a month or so to help rejuvenate the tea industry and we expect to reap the benefits from this scheme in the long run," Kakaty said.