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| India Infoline Sector Database | Wed, 18-Feb-2004 17:23:15 IST (GMT+5:30) | |
| Tea | ||
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Global scenario India and China rank as the largest and second largest, respectively, in tea production as well as consumption. Together they account for around half of world's tea production. They export about a quarter of their production. In global trade India's contribution is 17% while that of China is 17.6% vis-à-vis the production contribution of 30% and 23% respectively. This is because of high consumption of tea in both these countries. Other countries like Kenya, Sri Lanka and Indonesia produce only 25% of world tea but control 50% of the global trade. They export around 90% of their production. As per a FAO report on tea industry the market for tea is expected to grow at 3% per annum till 2005 (on base period 1993-95). In 1999 the world's total tea produce was estimated at 2.83bn Kgs as compared to 2.96bn Kgs in 1998. This production is expected to go up to 3.1bn Kgs by 2005. The consumption of tea too is expected to increase by 3% per annum till 2005 (on base period 1993-95) to 3.0bn Kgs Of this 3bn Kgs nearly 2.2bn consumption is going to come from developing countries and rest from developed ones. With removal of QRs following WTO regulations coming into force, the consumption is going to get a major fillip particularly in developing nations. During the last four decades, Kenya has increased tea production by 25 times. Chinese tea production has witnessed a CAGR of 4.6 %. The production growth has been slower in India and Sri Lanka at 2.3% pa and 0.9% pa respectively during the same period. The area under cultivation, during the last four decades has gone up by 33% in India whereas in Kenya, it got multiplied ten times during the same period. Tea production is concentrated in a few countries due to suitable climate, soil and availability of cheap labor. Major tea producing countries and their share in prodcution (1998)
Major Tea Exporters and their share in world trade
Source Tea Board, Industry, Probity Tea consuming nations Tea, as a beverage, is enjoyed by more than half of the world's population. Historically, tea consumption has been very high in the U.K and Ireland. However, the consumption is declining there. U.K. and Ireland accounted for one- third of the world's tea consumption in 1955. Their share in tea consumption currently is around 5%. In 1999 UK Tea popularity has been growing rapidly in developing countries like India, China, Pakistan and the Middle Eastern countries. Tea consumption grew rapidly in the erstwhile USSR in the eighties but declined after its disintegration. Tea consumption is stagnant in other developed countries such as USA, Canada and Japan. Instant tea market is very small at 3.7mn kg. Major instant tea consumers are U.S.A. and West Europe and major exporters are India and Kenya. GATT (WTO) impact on world tea economy An inter-governmental group, under the auspices of United Nations studied WTO impact and made projections till the year 2005. WTO requires member nations to reduce import duty by 24% from the existing rates, by the year 2005. Among the importing nations, Pakistan has a high import duty of 25%. The developed nations (U.K., U.S.A.) already have nil duty and will not be effected. In India tea import is allowed but only for re-exports and not for consumption. The import duty on tea is at 35% but for imports under Indo-Lanka bilateral agreement imports from Sri Lanka area allowed at a concessional rate of 7.5% only. The impact on Indian domestic industry will be negligible because of the re-export clause. Tariff reduction is likely to cause higher imports by Pakistan, Iran, Iraq and Egypt. India and other exporting countries will benefit from freer trade and lower tariff barriers.
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