Brewing trouble: Why North India's tea industry is feeling the heat and price pain

The Tea Association of India (TAI) has raised concern over a sharp fall in tea prices at auctions in recent weeks, warning that the situation could threaten the financial sustainability of tea estates, particularly in Assam and West Bengal.

The concern comes at a time when tea growers are already dealing with floods, excessive heat and serious pest and disease infestations. These conditions have affected tea production during the current growing season, while the industry is also facing higher costs and weaker exports.

In simple terms, tea producers are worried because the price they are receiving for their tea is falling even as it is becoming more expensive and difficult to produce it.

What has happened to tea prices?

According to the TAI, average auction prices of tea in north India fell significantly between July and mid-August.

The decline was seen at the three major tea auction centres in Kolkata, Guwahati and Siliguri. At these auctions, tea produced by estates is sold to buyers such as traders and packers.

The sharpest fall was recorded in Kolkata. The average price of CTC tea fell from Rs 291.27 per kg in Sale No. 26 to Rs 238.77 per kg in Sale No. 34 — a decline of Rs 53, or about 17 per cent, in less than two months.

CTC, which stands for Crush, Tear and Curl, is a method of processing tea leaves. It is widely used to make the strong, granular black tea commonly consumed in India.

At the Guwahati Tea Auction Centre, the average CTC tea price fell from Rs 264.89 to Rs 221.57 per kg, a drop of around 15 per cent.

Prices at the Siliguri auction centre also declined by around 8 per cent, falling from Rs 201.80 to Rs 182.30 per kg during the same period.

TAI president Shailja Mehta said the steep fall over the last five to six weeks had triggered widespread concern across the tea industry.

Why is the fall worrying producers?

A fall in auction prices normally becomes a major concern for tea estates when their costs remain high or continue to rise.

The TAI said the industry was already facing increased expenditure, including on wages and bonus payments. Producing tea also requires spending on workers, fertilisers, pest control and the maintenance of tea gardens.

At the same time, growers are facing adverse weather and crop damage.

Assam has been hit by floods, while other tea-growing areas in the north have faced excessive heat and severe pest and disease infestations. Tea bushes submerged in floodwaters are also expected to take time to recover.

This means producers could be earning less for their tea while facing higher expenses and damage to their crops.

Is there too much tea in the market?

The TAI said the recent fall in prices could not simply be blamed on an oversupply of tea.

Tea Board data showed that production in north India was about 5 per cent higher than last year during the current growing season until June. This amounted to an increase of around 16 million kg.

However, the TAI said the trend changed after severe floods in Assam, excessive heat and pest infestations affected tea-growing regions.

Data received from TAI member estates showed an 8 per cent fall in production in July compared with the same month last year. A similar decline was expected in August, according to the association.

Taken together, north Indian tea production could be lower by around 8 million kg by the end of August compared with the same period last year, Mehta said.

Production could decline further in the coming months, particularly in Assam, because flood-affected tea bushes may need time to recover.

What does 'north Indian tea industry' mean?

Under the Tea Board's classification, tea-growing regions in Assam, West Bengal and neighbouring states are grouped together as the north Indian tea industry.

Tamil Nadu, Kerala and other tea-producing regions in the south are classified as the south Indian tea industry.

The latest concern raised by the TAI is mainly about the situation in the north, where Assam and West Bengal are among India's most important tea-producing regions.

Exports are adding to the concern

The export situation is also weighing on the industry, according to the TAI.

India recorded a record tea export of 285.53 million kg in 2025. However, exports between January and June this year were around 23 million kg lower than during the same period last year, according to Tea Board data.

That represents a decline of about 18 per cent.

Mehta attributed the weak export scenario this year to the recent geopolitical crisis.

For tea producers, weaker exports can add to concerns about demand because overseas markets are an important destination for Indian tea.

Why the TAI sees a difficult period ahead

The association's main concern is that several pressures are hitting the industry at the same time.

Auction prices have fallen sharply. Production has been disrupted by floods, heat and pest attacks. The cost of running tea estates, including wages and bonus payments, has increased. Exports have also fallen behind last year's levels.

The TAI said these developments have raised concerns about the future and financial sustainability of the tea industry in Assam and West Bengal.

"The auction price figures of north Indian tea industry recently reflect a precarious state of affairs in the industry, coupled with the onslaught of flash floods, excessive heat and severe pest and disease infestations hampering production of the crop during the current cropping season," Mehta said in a statement.

She added that the fall in auction prices over the past five to six weeks had sparked widespread concern across the tea industry.