Nepal's Role in India's Tea Economy

A Story of Two Countries, One Tea Sector.

Nepal's tea business has been quietly flourishing in the middle of the Himalayas, where the air is filled with the scent of fresh tea leaves and the slopes are covered in mist. India, one of the biggest producers of tea in the world, is located directly across the border and has long controlled the world market. However, Nepal plays a vital but frequently disregarded role in the complex network of economic ties that underlies the branding of Assam and Darjeeling teas.

Even though Indian tea farms are well-known throughout the world, Nepal's tea sector has been expanding quickly, providing India with significant amounts of premium orthodox and CTC tea. Nepal produced about 25,000 metric tons of tea in 2023, with 95% of its exports going to India. This shows how economically dependent the two countries are on one another. 

Nepal-India's Origins a Historical View of Tea Relations

Around the middle of the 19th century, when the British began growing tea in Darjeeling, tea was first brought to Nepal. Nepal mirrored the techniques across the border by establishing its first tea gardens in Ilam and Jhapa, which were modeled after British plantation methods. More than 10,000 hectares of tea were grown in Nepal by the 1950s, however a large portion of its production was unbranded and unofficially incorporated into India's tea business. Nepalese tea was subtly assimilated into India's tea industry for many years, frequently being mixed with Darjeeling tea and marketed under Indian names. Nearly 60% of Darjeeling-branded tea marketed domestically contained Nepalese leaves, according to a 2021 study by the Tea Board of India. This statistic sparked questions regarding fair pricing and authenticity.

Nepalese Tea's Economics in India

Approximately 95% of Nepal's entire tea production is currently exported to India. More than 17,000 tons of Nepalese tea were imported into India in 2022 alone, a 25% rise from 2018. Almost 150,000 people are employed directly or indirectly by the Nepalese tea business, which generates an estimated USD 8 billion in trade earnings yearly. These numbers demonstrate both India's dependence on Nepalese tea to sustain supply levels and Nepal's growing contribution to India's tea sector.

Cost, Labor, and Market Prices

At an average price of INR 200 per kilogram, Nepalese tea is far less expensive than Darjeeling tea, which costs INR 700 per kilogram. More than 200 small-scale Indian tea producers in Darjeeling reported financial difficulties in 2022 as a result of Nepalese tea undercutting their prices in domestic marketplaces; labour costs in Nepal are 30–40% lower than in Indian tea estates, allowing for more competitive pricing.

The economic facts are unmistakable: Nepalese tea benefits Indian consumers but poses a problem for regional Indian growers, sparking discussions about policy and protectionist actions.

The Wars of Competition and Regulation

The Battle for Certification and Authenticity

Nepalese tea is not officially certified in international markets, in contrast to Darjeeling tea, which bears a Geographical Indication (GI) marking. The introduction of less expensive Nepalese tea into the premium market costs the Indian tea sector about INR 500 million a year. To stop unfair mixing techniques, the Indian tea industry has been calling for stronger certifications of origin.

Is Tariff-Free Trade Beneficial or Dangerous?

Indian tea growers have called for tariff limits, citing unfair price rivalry; Nepal has duty-free access to the Indian market under the Indo-Nepal Trade Treaty. The dynamics of cross-border commerce could be impacted by a 20–30% increase in Nepalese tea prices if tariffs were implemented.

The Human Aspect of the Tea Trade between India and Nepal

Nepalese Migrant Workers in India: The Invisible Hands

Nepalese migrant workers make up over 40% of the workforce in Darjeeling's verdant plantations. Although they are essential to India's tea crop and frequently cross the porous border for seasonal work, these workers are rarely acknowledged in official records.

The Battles of Tea Workers In Nepal

The typical tea worker earns INR 180 per day, but in India, they make between INR 250 and 300. 70% percent of Nepalese tea workers do not have access to social security or health insurance. Many employees labour in hazardous conditions, such as being exposed to pesticides and working long hours in inclement weather.

Gender Differences in Tea Labor

Although women comprise 60–70% of the labour force on tea plantations in India and Nepal, they barely occupy 5% of managerial roles. The gender pay gap still exists, with women employees making 10–15% less than men.

Issues with Child Labor

Over 5,000 youngsters in Nepal and India are reportedly involved in tea picking because of financial difficulty, despite attempts to stop child labour.

Prospects and Challenges for the Future

Maintaining a fair and advantageous partnership is essential as the tea trade between India and Nepal develops. Policies that safeguard farmers, advance fair trade, and maintain economic growth must be the goal of both countries.

Is it possible for Nepal and India to create a framework for fair trade that works for both countries?

Yes, both nations may establish a stable and just framework for the tea trade by putting into effect bilateral trade agreements that contain minimum price guarantees and fair-trade standards. These kinds of agreements would guarantee equitable remuneration, shield farmers from market swings, and promote sustainable production. These steps can also help small-scale growers compete with larger tea producers and stop exploitative pricing. A fair-trade system must also provide worker safeguards and labour rights. Many tea workers in Nepal and India deal with unstable employment, low pay, and unfavourable working conditions. Tea workers' livelihoods will be improved by bolstering labour regulations, raising pay, and granting access to social benefits and healthcare, which will promote a more moral and sustainable. 

Would Nepalese tea be able to stand out in the international market with GI certifications?

Yes, because it is frequently blended with Indian teas, Nepalese tea, despite its excellent quality, sometimes fails to achieve independent attention. Like Darjeeling and Assam teas, Nepalese tea would have a distinct character in the international market if it were granted a Geographical Indication (GI) designation. By verifying the authenticity of Nepalese tea, a GI badge would guarantee better prices and lessen reliance on Indian branding.

Nepalese tea growers might sell their goods directly to consumers abroad with GI certification, gaining premium prices and increasing their awareness internationally. Certification would also encourage investments in Nepal's tea industry, leading to advancements in marketing, packaging, and processing techniques. Additionally, Nepalese tea might compete in specialized tea markets thanks to GI certification, which would shield it from unfair competition and mislabeling. Nepal might increase its export potential outside of India by establishing Nepalese tea as a unique and superior product that can be sold in North America, Europe, and the Middle East.

In order to resolve trade imbalances, increase transparency, and guarantee that both nations gain from a robust and sustainable tea business, India and Nepal must cooperate going forward. The tea trade between Nepal and India may progress toward a more profitable and equitable future by promoting collaboration, endorsing fair trade programs, and adopting GI certification.

Darjeeling Tea's Prospects in a Changing Market

Darjeeling tea producers must make investments in premium, specialty, and organic teas in order to preserve their market position in the face of growing competition. Known as the "Champagne of Teas," Nepalese tea and other foreign tea producers are becoming a bigger threat to Darjeeling tea. Darjeeling tea producers must concentrate on organic and biodynamic farming methods to preserve their tea's premium reputation, making sure it stays free of artificial chemicals and pesticides. Additionally, expanding into specialty teas like oolong, white, and hand-rolled types might draw in affluent customers prepared to shell out more for distinctive tastes and handcrafted workmanship. Partnerships with influencers and tea sommeliers throughout the world may help improve market penetration and brand renown. 

Conclusion

To become less reliant on the Indian market, Nepalese tea growers must improve their branding and international reputation. In order to gain a significant presence in the global market, Nepalese tea growers need to differentiate themselves from Darjeeling tea. This calls for spending money on branding, packaging, and marketing plans that showcase the distinctive qualities of Nepalese tea, such its strong flavour, flowery scent, and high-altitude production. Organizing tea festivals of Nepalese provenance, attending international trade shows, and setting up cooperatives helps increase awareness and customer confidence. Furthermore, Nepalese tea can establish a niche in the specialty tea industry by using digital marketing and e-commerce platforms to directly reach consumers across the world.