Demand for Nepali tea is rising in the Indian market as production has slipped across the border.

Nepali tea traders say Indian tea estates are going through a lean period as the tea bushes there have reached the end of their life cycles. Most of the plants are 80 years old, and some are more than 100 years old.

As these bushes have been uprooted, the acreage and output have dropped sharply, they say.

Udaya Chapagain is executive director of Gorkha Tea Estate in Ilam which exports Nepali orthodox tea to Europe and the United States. He says there is massive demand for tea in India, and Nepali tea growers should make good use of the opportunity.

India is the second largest tea producer in the world after China. Indian teas like Assam, Darjeeling and Nilgiri teas are valued for their strong flavour and intense aroma, and are considered to have the finest flavours in the world.

India is the fourth largest exporter of tea and accounts for 12 percent of global shipments. Kenya (28 percent), China (19 percent) and Sri Lanka (14 percent) are first, second and third, in that order.

India’s tea exports were valued at $704.36 million in the fiscal year 2020-21.

“India is the second largest producer of tea but its tea market today is being kept up by Nepali tea,” said Chapagain.

Last October, India lifted an 11-month-old ban on blending Darjeeling tea with other teas, raising the spirits of the Nepali tea industry which greatly depends on exports to the southern neighbour.

Indian tea producers can now mix Nepali tea with their products, but they are not permitted to use the name “Darjeeling” on the mixture.

The Indian directive to restrict foreign teas proved to be counterproductive as domestic buyers such as Tata Consumers Products largely remained absent in auctions to procure Darjeeling tea which is blended in their popular Tata Gold pack, according to media reports.

Nepal produces about 26,379 tonnes of green tea leaves annually and exports nearly half of it.

According to the Department of Customs, Nepal exported 14,784 tonnes of tea worth Rs3.34 billion in the first 10 months of the current fiscal year ended mid-May. Of the total shipments, India accounted for 14,449 tonnes valued at Rs2.99 billion.

As per official statistics, nearly 98 percent of the tea produced in Nepal is exported to the Indian market. There is great demand for both types—crush, tear, curl (CTC) and orthodox.

Several reports showed that some Indian tea producers in Darjeeling are bringing green leaves from estates across the border in Nepal and selling them as Darjeeling tea, thereby jeopardising the geographical indication value of Darjeeling tea.

Russia, Germany and the US are the largest markets for Nepali tea after India.

"There is high demand for orthodox tea in Europe. If we can match shipments with demand, it will help Nepal to boost its foreign currency reserve,” said Buddha Tamang, a tea entrepreneur from Ilam.

India exports 70 percent of its tea. An Indian tea entrepreneur said that tea imported from Nepal was sustaining its internal market.

Most of the tea produced in India is grown in the states of West Bengal, Assam, Sikkim, Nagaland, Himachal Pradesh, Tripura and Arunachal Pradesh.

“Although tea is produced in more than 10 states in India, Indian traders nowadays prefer to import Nepali tea,” said an Indian trader. “This is because of the quality and low price.”

Recently, according to Indian media reports, tea production in India has declined as a result of climate change, labour problems, low productivity and low profitability.

“When tea production in India declines, demand for Nepali tea soars,” said Aditya Parajuli, a tea entrepreneur from Bhadrapur.

"Demand for Nepali tea jumped in India during the Covid-19 pandemic when Indian production fell,” he said.

This year too Nepal is likely to set a record in tea exports in terms of value because of the drop in production in India.

Anshuman Kanoria, president of the Indian Tea Exporters Association, says demand for Darjeeling tea in Europe has dropped by about 15 percent. Germany, the largest importer of Indian tea, is going through a recession. The export of Indian tea to Japan has also decreased.

According to the Indian Tea Exporters Association, India exported more than 3,000 tonnes of tea last year.

The production of Darjeeling tea has been gradually declining, the association said. In 2016, output came to about 8,000 tonnes.

Kanoria said disruptions caused by the Gorkhaland movement in 2017 hurt the tea sector. He says there is no initiative from the government to promote Darjeeling tea in the global market. There are more than 70 tea gardens in Darjeeling.

Nepal grows two types of tea: Camellia assamica or CTC tea which grows at lower altitudes and in the hot and humid plains of Nepal, primarily in Jhapa district. This tea accounts for almost 95 percent of domestic consumption owing to its lower cost of production.

Camellia sinensis or orthodox tea is grown at altitudes of 900 to 2,100 metres. Four districts in the eastern hills are known for producing quality orthodox tea—Ilam, Panchthar, Dhankuta and Tehrathum.

Orthodox refers to a traditional production process where the plucked tea leaf is partially dried (withered), rolled and then fermented to give a light colour, unique aroma and fruity flavour. It usually fetches a higher price than CTC tea in view of its quality, demand in the market and higher cost of production.

Nepal has a long history of growing tea. The first tea estate, Ilam Tea Estate, was launched in 1863 in the hills of Ilam district.