Lanka Crisis Opportunity For Indian Tea Industry

Priyanka Tanwer
Priyanka Tanwer May 20 2022 - 4 min read
Lanka Crisis Opportunity For Indian Tea Industry
If the prevailing situation continues in Sri Lanka, the Indian market will boom, and India can offer good quality tea to all of them who really want it at any cost.

Severe economic crisis in Sri Lanka, a major player in the global tea market, has not been able to export tea from some time. This has created an opportunity for Indian tea industry to tap the untouched international market.

The tea traders of North Bengal believe that the present condition in Sri Lanka can create opportunities for the new market in India.

If the situation continues like this in Sri Lanka, the Indian market will boom, and people who look for good quality India can offer them as it produces good quality tea.

Sri Lanka is a major producer of orthodox tea, they produce around three million kg of orthodox tea, and a maximum of its products are exported to European and American countries.

Traders hope that the prevailing situation in Sri Lanka will play a vital role in boosting the orthodox tea market in India.

Sri Lanka is currently struggling with acute food and electricity shortages and the recession is attributed to foreign exchange shortages caused by a clampdown on tourism during the COVID-19 pandemic.

The country is unable to buy sufficient fuel and gas, while the people are being deprived of basic amenities as well.

As the economic crisis in Sri Lanka is worsening day by day, several people including those jobless are participating in the protest against the government to get two-times meals.

What Happened In Sri Lanka

The economic mismanagement by the successive governments in Lanka has led the country to twin deficit—a budget shortfall alongside a current account deficit.

The twin deficit signal that a country’s national expenditure exceeds its national income, and that its production of tradable goods and services is inadequate.

But the current crisis was accelerated by deep tax cuts promised by former PM of Sri Lanka Gotabaya Rajapaksa during a 2019 election campaign that were enacted months before the COVID-19 pandemic, which wiped out parts of Sri Lanka’s economy.

In February, Sri Lanka was left with only USD 2.31 billion in its reserves but faces debt repayments of around USD 4 billion in 2022, including a USD 1 billion international Sovereign Bond (ISB) maturing in July.

ISBs make up the largest share of Sri Lanka’s foreign debt at USD 12.55 billion, with the Asian Development Bank, Japan and China among the other major lenders.

In a review of the country’s economy released last month, the IMF said that public debt had risen to “unsustainable levels” and foreign exchange reserves were insufficient for near-term debt payments.

Indian Tea Industry

India is the second-largest producer of tea in the world. Indian tea is one of the finest due to strong geographical indications, heavy investment in tea processing units, continuous innovation, augmented product mix, and strategic market expansion.

The country is also among the top tea-consuming countries in the world with 80 per cent of the tea produced in the country being consumed by the domestic population.

India’s total tea production for the calendar year 2020 was 1,257.52 million kg and for the financial year 2020-21, it was 1,283 million kg.

India contributes about 10 per cent of the total export of tea. It is among the top five tea exporters in the world. In 2020, the total value of tea exports from India stood at USD 69.21 Crores ( around INR 5,191 crore).

Assam, Darjeeling and Nilgiri tea are considered one of the finest in the world.


India majorly exports black tea which is 96 per cent of the total exports.

The types of tea exported through India include Black tea, Regular tea, Green tea, Herbal tea, Masala tea, Lemon tea. Out of these, the black tea, regular tea and green tea make up approximately 80 per cent, 16 per cent and 3.5 per cent of the total tea exported from India respectively.

Initiatives By Government

The Tea Board of India started a scheme, Promotion for packaged Tea of Indian origin. The scheme provides assistance in promotional campaigns - up to 25 per cent of the cost reimbursement, display in International Departmental Stores, product literature and website development, and inspection charges reimbursement of up to 25 per cent of the charges.

The Tea Board also provides subsidies to the domestic exporters to participate in International Fairs and Exhibitions.

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