India's Tea Industry, One of World's Largest, Faces Problems

India's tea industry is facing tough times due to labor problems, declining demand at home and strong price competition abroad. India has traditionally been the world's largest producer of tea.

India's sprawling tea estates that spread over the eastern Himalayan mountain ranges usually hum with activity at this time of the year, as laborers pluck the leaves of the blooming tea bushes.

But this year, a strike called by a 250,000 tea estate workers has crippled operations for the past two weeks in West Bengal, one of India's two main tea-producing regions along with Assam.

The laborers, who are paid approximately a dollar a day, want their wages doubled. Tea estate owners insist that any hike must be linked to productivity, and labor unions have rejected that proposal.

The industry in West Bengal has piled up losses of $5 million a day due to the strike.

The labor problems were the latest bad news for an industry that has been hit in recent times by high production costs and slumping demand.

Tea industry officials say wages are lower in other tea-producing nations. Labor costs account for more than half the total cost of tea production.

The Indian Tea Association's deputy secretary, Pranjal Neog, says Indian tea, once predominant in world markets, has been steadily losing out as a result.

"Our cost of production per KG [kilogram] of tea manufactured has been uncompetitive with respect to other global players such as Sri Lanka, Kenya, and that has resulted in our losing out export markets," he said. "Simultaneously it has also affected our domestic markets. This has led to the recession."

The tea industry says it is also facing problems in the domestic market, which consumes 70 per cent of the beverage produced in the country. In recent years, demand has stagnated or even declined in some areas due to the growing popularity of such beverages as soft drinks - particularly among younger people.

Indian tea has traditionally dominated world markets since a few cases were exported to Britain in the mid-19th Century. But now, say tea growers, they only see tough times ahead.

Source : http://www.voanews.com