Darjeeling tea is more than a commodity; it embodies the region’s storied traditions and its unique connection to the Himalayan foothills. Renowned globally for its distinctive flavor and aroma, Darjeeling tea is at a crossroads as it navigates economic turbulence, the adoption of innovative practices, and a growing emphasis on sustainability.
A White Paper prepared by the Indian Tea Association outlines the urgent challenges confronting the sector, which stands as both an economic asset and a cornerstone of India’s legacy. The paper paints a grim picture, highlighting the steady decline in production, productivity, and yields, alongside plummeting prices that have rendered many tea plantations financially unviable. “Unless the industry is revived through targeted interventions and substantial financial support, the livelihoods of 55,000 permanent and 15,000 temporary workers, along with their families, will remain under severe threat,” warns the White Paper.
The Darjeeling tea sector has been experiencing a vicious cycle of low prices and declining production for tea growers, culminating in zero or negative profitability. In the absence of policy intervention, the status quo is likely to continue. In the long run, this could adversely affect workers in the sector, leading to a significant rise in unemployment.
Darjeeling tea, often referred to as the “Champagne of Teas,” has seen a steady decline in profitability due to rising production costs, labor shortages, and the encroachment of lower-cost competitors. According to the White Paper, global demand for premium tea remains strong, but the price realization for growers has stagnated, exacerbated by inflationary pressures and reduced margins. Darjeeling tea, renowned worldwide for its unique flavor and premium quality, faces unsustainable production costs averaging Rs. 650 per kilogram.
Tea production has shrunk at a compound annual growth rate (CAGR) of (-) 5.47% in the last five years due to declining yields, climate change adversities, low productivity, and other factors. While West Bengal and All India tea auction prices have grown at a CAGR of 2.34% and 2.88% respectively in the last ten years, Darjeeling tea auction prices have grown at a CAGR of only 1.23% over the same period. In the last six years, Darjeeling tea auction prices have declined at a CAGR of (-) 5% approximately. The average cost of production of Darjeeling tea is approximately Rs. 650 per kilogram, which is substantially above the auction averages.
The high-cost structure of Darjeeling tea estates, along with unremunerative price realizations, has impeded the viability of the tea sector in Darjeeling. The profit margin of companies indicates that tea estates in Darjeeling are in deep financial stress. The number of estates operating in losses has consistently increased over the years. In fact, most firms are making negative returns, which raises concerns about future investments and the sustainability of the Darjeeling tea industry.
Darjeeling’s hilly terrain presents unique challenges. High production costs, compounded by the adverse impacts of climate change, have eroded yields. The region’s saturation in tea-growing zones and the constraints on replantation due to topographical limitations further exacerbate the issue. Mechanization, a common solution elsewhere, remains impractical in Darjeeling due to the delicate quality of its tea and the terrain’s physical challenges.
The paper also highlights the growing threat posed by Nepal teas, whose surge in imports has significantly impacted the viability of Darjeeling tea. Under the Revised Free Trade Treaty of 2009, India and Nepal agreed to exempt primary products from basic customs duties and quantitative restrictions. However, this arrangement has led to significant disparities. According to the Customs Tariff 2023/2024 issued by Nepal’s Department of Customs, tea imports from India incur a 40% duty, while teas from Nepal enter India duty-free. This imbalance has placed the Indian tea industry, particularly the Darjeeling sector, at a distinct disadvantage. Meanwhile, the import price of Nepal tea remains significantly lower, further eroding the competitiveness of Darjeeling tea in both domestic and international markets.
International tea prices are characterized by relatively elevated volatility, which constitutes a major challenge for producers. Indian tea is not covered under any Minimum Price Support scheme, thus making it more vulnerable to price instability. In response, the Indian Tea Association (ITA) has submitted a strong case to the Commerce Ministry and the Tea Board, calling for the introduction of a Minimum Import Price (MIP) for Nepal teas. Such a measure would protect Darjeeling tea growers and prevent further financial strain on an already struggling sector. In 2023, the import of Nepal teas into Darjeeling was 13.66 million kilograms, while Darjeeling tea production was 6.01 million kilograms. The increase in tea imports from Nepal has adversely impacted Darjeeling tea auction prices.
The ITA also stresses the importance of regular inspections by the Tea Board and the Food Safety and Standards Authority of India (FSSAI). These inspections would ensure that teas imported from Nepal comply with food safety regulations, including pesticide limits and Maximum Residue Levels (MRLs). Another key concern is the authenticity and traceability of Darjeeling tea. There are fears that Nepal-origin teas might be misrepresented as Darjeeling tea, diluting the brand’s value. To combat this, the ITA has proposed routing all Nepal-origin teas through the auction system, a move that would enhance transparency and accountability.
Export markets, once a stronghold for Darjeeling tea, are now more competitive, with buyers opting for similar but less expensive teas from Nepal and Sri Lanka. Darjeeling exports have declined by 10% in the last three years. This shift has prompted calls for stricter regulations on labeling to protect Darjeeling’s Geographical Indication (GI) status and preserve its global standing.
The paper notes that some gardens in Darjeeling are taking positive steps toward reducing carbon emissions and transitioning toward possible Net Zero. A green incentive scheme would support industry players and motivate others. With exports declining, a scheme could be devised for the procurement of Darjeeling tea by government agencies for use in offices or distribution through the public distribution system.
Regarding certification, it says tea companies are stepping up their commitment to social and environmental issues, driving up the market share of certified tea. However, the cost of certification has increased, adding to the financial burden on Darjeeling tea producers.
The White Paper underscores that Darjeeling tea’s survival hinges on collaboration among policymakers, international buyers, and growers. It calls for greater investment in marketing campaigns to educate consumers about the unique value of GI-protected teas and for financial incentives to encourage innovation and sustainability.
In an increasingly competitive market, Darjeeling tea remains an irreplaceable cultural and economic symbol. The industry’s ongoing transformation reflects not only the resilience of its people but also its commitment to balancing heritage with progress. For tea lovers worldwide, the story of Darjeeling is a reminder that every sip carries the weight of history—and the promise of a sustainable future.
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