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The Tea Board of India in October reversed its year-long ban on blending imported Nepalese tea with Darjeeling. Blending will be permitted, but the resulting product cannot be called Darjeeling or marketed with the Darjeeling geographic indication logo.
The decision brought relief to tea growers in Nepal and India.
A Tea Board spokesman said, “we have removed the barrier to domestic Darjeeling procurement without weakening the original intent of the regulation.”
High mountain Darjeeling is a premium orthodox loose-leaf tea that generates most of the region’s $80 million in tea revenue. However, mechanized crush, tear, and curl (CTC) processing prevails in the plains below the hilltop gardens. Mechanized processing is less labor intensive and doubles the ratio of cups yielded per kilogram. This makes CTC ideal for producing blends for domestic consumption.
Nepal annually exports around three million kilograms of inexpensive “bought leaf” grades to India. In November 2021, India forbade growers in Darjeeling to blend their tea with exports from Nepal. The dictate also applied to Kangra, Assam (orthodox), and Nilgiri (orthodox) tea.
The ban crushed demand for Nepali tea, a sector valued at NPRs 5 billion Nepalese rupees ($52 million). Nepal sells 90% of its orthodox tea and 50% of its CTC to India. Bishnu Prasad Bhattarai, executive director of Nepal’s National Tea and Coffee Development Board, welcomed the news.
Last year's ban led Tata Consumer Products to stop bidding on Darjeeling blends for its domestic brands. TCPL purchases more than a million kilograms of Darjeeling tea yearly, about 15% of the region's output. The tea is used in their popular Tata Gold brand. Once the ban took effect, Tata found new suppliers in Sri Lanka and also bought tea directly from Nepal instead of Darjeeling suppliers.
The 1950 Indo-Nepal Free Trade Agreement permits traders on either side of the border to import tea duty-free. India's imports of tea from Kenya, Sri Lanka, Vietnam, and Nepal are meant for re-export. In recent years only half of the 60 million kilograms of tea that India imported were re-exported, suggesting that large quantities of imports were passed off as Indian tea.
Tata was not the only company that abandoned Darjeeling. The sudden exit of buyers led to a steep price decline at auction and jeopardized finances at several gardens. The price of Darjeeling tea (a composite of auction averages and private sales) fell from 600 rupees in 2021 to around 400 rupees in 2022 (about $4.85 per kilo). In October, the average price for Darjeeling leaf at the Tea e-Auction was 278 rupees, and the April high was 977 rupees.
Output declined to around 6 million kilograms in 2021 and remains low, down from the 11 million kilograms Darjeeling’s 87 gardens produced in 2017.
In September, the Economic Times reported that 35–40 of Darjeeling’s tea estates were up for sale. The news report stated that local real estate players were looking at buying these gardens to equip them with lodgings and earn revenues from tea tours.