Five major Indian tea industry associations have backed a recommendation by a Tea Board of India committee to introduce a Minimum Sustainable Price (MSP) for tea, citing a widening gap between production costs and market prices.
The Tea Board committee has recommended a composite index reflecting wage movements and the Consumer Price Index (CPI) for determining the benchmark MSP. It has also proposed periodic reviews of the benchmark to ensure that the pricing framework remains aligned with changes in production costs and inflation.
Senior representatives from 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) outlined their support for at a joint press conference. Together, the five bodies represent segments across the tea value chain, including organised tea estates, small growers, and processing factories.
The five associations have urged the Union Ministry of Commerce to take favourable note of the committee's report and notify the Minimum Sustainable Price at the earliest to protect millions of livelihoods dependent on the sector.
India is the world's second-largest tea producer, generating between 1,350 million and 1,400 million kilograms annually. However, industry figures show that while input costs have climbed at an estimated compound annual growth rate (CAGR) of 10% to 14%, tea price realisations have increased by only 2% to 3%.
{{/usCountry}}India is the world's second-largest tea producer, generating between 1,350 million and 1,400 million kilograms annually. However, industry figures show that while input costs have climbed at an estimated compound annual growth rate (CAGR) of 10% to 14%, tea price realisations have increased by only 2% to 3%.
{{/usCountry}}Industry leaders warned that this growing disparity has weakened producers' ability to improve productivity, maintain quality standards, and sustain operations. Labour expenses account for roughly 60% of total tea production costs. Producers anticipate further financial pressure once the central and state governments notify floor wages under the Code on Wages.
Tea price realisations have remained largely stagnant
C.K. Dhanuka, Chairman of Dhunseri Tea and Industries, noted that tea price realisations have remained largely stagnant despite mounting cost pressures. "A Minimum Sustainable Price will help bring realisations in line with costs, so that the industry can accommodate wage revisions, protect employment and [maintain] the competitiveness of Indian tea," he said.
ITA Chairman Suneel Singh Sikand described the proposal as an important policy intervention to address structural challenges. “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,” Sikand said.
TAI President Shailja Mehta added that stronger financial viability would enable estates to invest in modernisation, uphold quality benchmarks, and respond effectively to evolving market requirements. “This will be vital in reinforcing the global standing and competitiveness of Indian tea,” Mehta said.
UPASI Secretary General Sanjith R. Nair noted that the mechanism must remain responsive to regional variations in agro-climatic conditions, production practices, productivity levels, and cost structures across India's tea-growing regions while ensuring the overall sustainability and international competitiveness of Indian tea.
Importance for small tea growers
The proposed pricing framework holds particular weight for small tea growers, who produce nearly 55% of India's total tea output. Small growers rely on selling freshly harvested green leaf to bought-leaf factories (BLFs), which process the crop into made tea. According to industry representatives, when made-tea prices fall short of covering processing expenses, factories face pressure to lower green-leaf procurement prices, creating a cascading strain across the supply chain.
"A properly structured Minimum Sustainable Price mechanism would help ensure more remunerative and stable returns for small tea growers, thereby safeguarding their livelihoods and supporting the sustainable growth of this important segment," said CISTA President Bijoy Gopal Chakraborty.
FITMA Chairman Deven Singh stressed that BLFs serve as a critical link by giving small growers market access, adding that any MSP framework must account for factory processing economics alongside green-leaf procurement and made-tea rates.