Darjeeling Tea Planters Again Seek MIP for Tea Imports from Nepal in 2023
According to ITEA, the ministry has yet to respond or take any further action. To curb the dumping of cheap tea from Nepal, Kanoria remarked, “We are reinforcing our demands for the imposition of a minimum import price.”
Tea growers in Darjeeling have renewed their call for a minimum import price (MIP) for Nepalese tea imports.
In January, the Indian Tea Exporters Association (ITEA) proposed to Piyush Goyal, minister of commerce and industry, that a MIP be enforced for tea from Nepal since the low-cost imports have been driving down the price of Darjeeling tea in the domestic market and resulting in significant losses for the growers. After that, the tea industry and associations were invited to comment on the plan by the Ministry of Business and Industry.
The first product in India to receive a GI tag was Darjeeling tea. The fragrant tea is up against competition on the local market from kinds cultivated in Nepal, which sell for up to 50% less than Darjeeling tea.
Additionally, the ITEA has asked the government to sell all imported tea through a specific Tea Board auction mechanism so that FSSAI compliance and price verification can be tracked. “To give Darjeeling tea a lifeline, an immediate, one-time cash subsidy is required,” Kanoria added.
The two main international markets for this premium tea are Europe and Japan. The war between Russia and Ukraine has made the EU market “soft.” Kanoria claims that exports are also being impacted by the “unrealistic food safety rules” of the EU.
Japan’s quantity offtake is similarly low this year, partly due to a depreciating yen. He said that there is significant pricing pressure.
Darjeeling tea exports have stagnated between 3-3.5 million kg yearly over the past five to eight years. Exports typically account for close to half of Darjeeling tea’s annual production.
According to insiders in the business, the output of Darjeeling tea has been steadily declining for more than a century due to climate change, labor disputes, and decreased productivity and profitability. Many gardeners have sold their properties in recent years due to financial difficulties.
In 2023, Darjeeling tea planters again called for implementing a Minimum Import Price (MIP) for tea imports from Nepal. Despite the geographical proximity and cultural similarities between Darjeeling and the neighboring country, the influx of cheaper Nepali tea into the Indian market has been a concern for Darjeeling’s tea industry for years.
This request underscores a complex interplay of economics, geopolitics, and trade relations between India and Nepal.
Darjeeling tea is renowned worldwide for its unique aroma and flavor, achieved partly through the region’s specific geographical and climatic conditions. The tea is protected under the Geographical Indications (GI) of Goods Act, meaning it can only be labeled “Darjeeling” if produced in the Darjeeling tea gardens.
In recent years, however, the Darjeeling tea industry has faced a threat from imported Nepali teas, which closely resemble Darjeeling tea in aroma and taste but are often priced more competitively.
These imports, stakeholders argue, have created an uneven playing field, making it difficult for Darjeeling teas to compete on price while maintaining their hallmark quality.
A Minimum Import Price would set a floor price for imported Nepali teas, preventing the influx of cheaper alternatives into the Indian market. This mechanism aims to protect the local Darjeeling tea industry from unfair competition. Supporters argue that a MIP will.
The influx of similar but cheaper tea dilutes Darjeeling tea’s uniqueness and luxury status. The Darjeeling tea industry is a significant employer in the region. Cheaper imports put these jobs at risk. A MIP would ensure that the Darjeeling tea industry does not compromise its standards to lower costs and compete with cheaper imports.
Critics argue that implementing a Minimum Import Price could strain trade relations between India and Nepal, potentially inviting retaliation. Nepal’s tea industry is also an essential source of employment and income for its people. Critics also point out that:
- Trade Diplomacy: A unilateral imposition of a MIP could contravene international trade norms and may require renegotiating existing trade agreements.
- Consumer Choice: An MIP could increase prices, limiting consumer access to various products.
This is not the first time Darjeeling tea planters have called for such measures. Similar calls have been made in the past but have yet to be implemented due to diplomatic concerns and the potential impact on bilateral relations between the two countries.
As of August 2023, the proposal for a MIP is under consideration by the Indian government. Trade representatives from both countries are expected to hold talks to discuss this issue further. The outcome remains uncertain, given the nuanced aspects and various stakeholders involved.
The call for a Minimum Import Price on tea imports from Nepal by Darjeeling tea planters brings attention to the fragile ecosystem of localized industries in the face of global trade.
While the need to protect local industries and livelihoods is urgent, actions must also consider the more enormous geopolitical implications and fair trade principles.
As the debate continues, the issue brings forth essential questions about balancing safeguarding local industries and maintaining good international relations.
