Tea plantation business has gone through a tumultuous last two decades, ever since the WTO came into being and quantitative restrictions (QRs) were lifted. Global movement of commodities became commonplace and consuming countries increasingly started relying on low-cost teas of South-East Asia, thus increasing competition on the demand-side, impacting the price line of Indian teas.
The burgeoning growth of the small-holder sector (currently 50 per cent of Indian production of 1,390 million kg), consistent with their ability to produce teas at a lower cost, also added pressure to the price lines.
Being an industry with 65 per cent of its cost on wages, and prices not keeping pace with wage increase and other input costs, operating margins came increasingly under pressure. The wage/price movement has…