Five leading tea industry associations have welcomed the recommendation of a 10-member committee constituted by the Tea Board of India to introduce a Minimum Sustainable Price (MSP) for tea. The Indian Tea Association (ITA), Tea Association of India (TAI), United Planters’ Association of Southern India (UPASI), Confederation of Indian Small Tea Growers Associations (CISTA) and Federation of Indian Tea Manufacturers Association (FITMA) have called for a sustainable pricing framework to ensure remunerative returns for producers, safeguard small tea growers and strengthen the long-term viability of the sector.
India, the world’s second-largest tea producer, produces approximately 1,350–1,400 million kg of tea annually. Small tea growers account for nearly 55% of national production. However, rising input costs and relatively stagnant tea price realisations have placed increasing financial pressure on the industry. While tea prices have recorded an estimated compound annual growth rate (CAGR) of 2–3%, input costs have risen at an estimated CAGR of 10–14%. This widening gap has affected producers’ ability to sustain operations, invest in replantation, improve productivity and maintain quality standards.
Representatives of the five associations, which represent organised tea estates, small tea growers and bought-leaf factories, highlighted the need for a pricing mechanism that takes into account the diverse economic conditions across the tea value chain. CK Dhanuka, Chairman, Dhunseri Tea and Industries, said, “The tea industry is confronted with mounting cost pressures, while tea price realisations have remained relatively stagnant. With further increases in wage costs anticipated pursuant to the implementation of the Code on Wages, the financial viability of tea producers is likely to face additional challenges. A Minimum Sustainable Price framework is therefore essential to bridge the widening gap between production costs and market realisations and to ensure the long-term sustainability of the industry. A Minimum Sustainable Price will help bring realisations in line with costs, so that the industry can accommodate wage revisions, protect employment and safeguard the competitiveness of Indian tea.”
Employment costs account for approximately 60% of the total cost of tea production, making the sector particularly vulnerable to wage increases. The anticipated notification of floor wages by Central and State Governments under the Code on Wages is expected to add to operating costs. To address these pressures, the Committee has recommended a composite index reflecting wage movements and the Consumer Price Index (CPI) to determine the benchmark MSP, along with periodic reviews to keep it aligned with production costs and inflation.
Suneel Singh Sikand, Chairman, Indian Tea Association, said, “The recommendation for a Minimum Sustainable Price is an important policy intervention towards addressing the structural challenges confronting the Indian tea industry. Ensuring remunerative returns to producers is critical to sustaining operations, facilitating investment in replantation and productivity enhancement and securing the industry’s long-term sustainability.”
The associations also stressed that the framework must recognise regional differences in agro-climatic conditions, production practices, productivity and operating costs. Ms. Shailja Mehta, President, Tea Association of India, said the proposed framework would help producers maintain quality standards, invest in modernisation and productivity enhancement, and respond to changing market requirements, thereby reinforcing the global competitiveness of Indian tea. Sanjith R Nair, Secretary General, UPASI, added that the MSP mechanism must remain responsive to the varying economic realities of India’s tea-growing regions while supporting the sector’s sustainability and international competitiveness.
The proposed framework is particularly significant for small tea growers, whose livelihoods depend on the prices received for freshly harvested green leaf. Bought-leaf factories (BLFs) procure this leaf and process it into made tea. When made-tea realisations are insufficient to cover processing costs and support sustainable procurement prices, BLFs face pressure on the prices they can offer growers. The associations believe a well-designed MSP could help address this imbalance while recognising the distinct cost structures of small growers, BLFs and organised tea estates.
Bijoy Gopal Chakraborty, President, CISTA, said a properly structured MSP would help secure more remunerative and stable returns for small tea growers, safeguarding livelihoods and supporting the sustainable growth of the segment. Mr. Deven Singh, Chairman, FITMA, emphasised that the framework must also recognise the operating economics of BLFs, which provide market access to small growers and play a critical role in the tea value chain.
The associations expect the Ministry of Commerce, Government of India, to take favourable note of the Committee’s recommendations and notify the Minimum Sustainable Price for tea at the earliest. They believe a financially sustainable industry is essential to maintaining quality tea production, safeguarding the livelihoods of millions dependent on the sector and strengthening India’s position in the global tea market.
