New life for defunct Dharamshala tea factory as Himachal govt nears lease deal

Shut for 12 years, the cooperative plant could resume operations by next month, offering a lifeline to Kangra’s struggling small-scale tea growers.

The Himachal Pradesh cooperation department is finalising a lease agreement to revive the Sidhbari Cooperative Tea Factory in Dharamshala, which has been defunct since 2014. The move is expected to provide a major boost to small tea planters in the region.

Spread over about 20 kanals (2.5 acres), the Sidhbari Cooperative Tea Factory in Dharamshala began operations in the 1980s, but has been lying defunct for 12 years. (HT Photo)

The auction process for the factory is in its final stages. Of the three bidders, the highest has cleared the initial requirements, and officials are currently drafting the lease deed. The officials declined to disclose details of the highest bidder until the agreement is finalised.

Boom to liquidation

Spread over about 20 kanals (about 2.5 acres), the factory began operations in the 1980s. High operational costs and mounting losses forced it to shut down in 2014. An administrator was appointed in 2016, and the asset officially entered liquidation in 2024.

At its peak, the cooperative served 212 members and processed around 3 lakh kg of tea annually. It was one of four cooperative factories—alongside Palampur, Bir, and Baijnath—established by the state government between the 1960s and 1980s to support small growers. At present, only the Palampur unit survives, though it also operates at a loss.

The processing plant, which has been lying defunct since 2014, needs an overhaul that the new lessee must undertake. (HT Photo)

Strict lease terms

“We have fixed the annual lease amount at ₹5 lakh, alongside a security deposit,” said CL Thakur, the assistant registrar for the department of cooperation. “The facility must be used exclusively for tea processing; no other commercial activity will be permitted, though tea tourism initiatives will be allowed.”

Thakur added that the revival efforts have been underway since last year, and the final handover is expected by next month.

The processing plant, which has been lying defunct for 12 years, needs an overhaul that the new lessee must undertake.

Boost for Kangra tea

Local planters believe restarting the factory will throw a lifeline to small growers and help rejuvenate the regional industry.

Kangra tea, grown at altitudes of 900 to 1,400 metres along the slopes of the Dhauladhar range, is globally recognised for its distinct aroma and fruity undertones. While it once enjoyed robust export markets across Europe, Central Asia, Australia, Afghanistan, and Pakistan, the local industry has faced a steep decline in both demand and production over recent decades.