Siddharth Roy
(siddharth001.roy@gmail.com)
Assam’s tea industry is facing a dangerous paradox: the crop has been battered by floods, heat and pests, yet the price received by producers is falling sharply. At the Guwahati Tea Auction Centre (GTAC), average CTC prices fell from Rs 264.89 a kg in Sale 26 to Rs 221.57 in Sale 34 i.e. a decline of about 15% in less than two months. Kolkata recorded an even steeper fall of about 17%, while Siliguri declined about 8%. This is a warning about the structural vulnerability of Assam’s tea economy.
The explanation is a collision of supply disruption and weak market realisation. Tea Association of India data indicates that North Indian production was about 16 million kg, or 5%, higher than the previous year up to June 2026. But the picture changed dramatically thereafter. Member estates reported an estimated 8% fall in production in July, with another similar decline expected in August. By the end of August, North Indian output could be around 8 million kg below last year’s level. In Assam, flood-submerged bushes may take considerable time to recover.
Tea Board’s weekly data reveal how rapidly the market has deteriorated. The average Guwahati CTC auction price was Rs 259.27 a kg on July 4; it fell to Rs 248.55 on July 18, Rs 244 on July 25, Rs 235.59 on August 1, Rs 231.62 on August 8 and Rs 230 on August 15. The fall is striking because it has occurred as production prospects worsened. The problem is therefore not simply physical supply. Demand, buyer behaviour, export uncertainty, quality, inventory and expectations are influencing price discovery.
Exports are an important part of the equation. India exported a record 285.53 million kg of tea in 2025, but January-June 2026 exports were about 23 million kg, or 18%, below the corresponding period last year, according to Tea Board figures cited by the industry. The official data also show that India exported 262.98 million kg worth Rs 7,817.58 crore in 2024-25. Tea is therefore an important export earner, employer and regional economic anchor.
The export challenge is also geographical and geopolitical. India’s top 20 tea markets accounted for 88.21% of exports during April-December 2025-26. The UAE, Iraq, Russia, China, the United States, Iran, the United Kingdom, Germany, Saudi Arabia and Turkey were among the leading destinations. Such concentration creates vulnerability when freight, payments, conflicts or consumer demand change. The recent disruption in India-Iran trade, for example, is particularly relevant because India exported $14.34 million of tea to Iran in the first half of 2026.
For Assam, the crisis cannot be separated from climate risk. Flooding has already damaged tea gardens and disrupted plucking. At least 30 gardens were reported affected, with 11 described as severely damaged earlier in the season. Excessive rainfall can waterlog roots, erode topsoil and disrupt field operations; prolonged cloudiness can affect photosynthesis and shoot growth. At the same time, excessive heat and pest infestations in other North Indian tea regions demonstrate that climate volatility is becoming a production risk across the tea belt.
The more worrying issue is liquidity. Tea is a continuous-cost business. Wages must be paid, statutory obligations met, fertilisers and pesticides purchased, machinery maintained and workers provided welfare facilities regardless of the auction price obtained that week. The TAI has specifically pointed to higher wage liabilities and larger bonus outflows. When prices fall while costs rise and output becomes uncertain, working-capital stress can quickly become a threat to estate viability.
The policy response cannot be another short-term package. Assam and the Centre need a tea resilience strategy. First, working-capital support should be made available to viable estates and small growers facing temporary price shocks, preferably through interest subvention and credit guarantees rather than indiscriminate subsidies. Second, crop insurance must become more responsive to flood, pest and extreme-weather losses. Third, flood-resilient estate infrastructure — drainage, raised worker housing, culverts, internal roads and emergency access — needs targeted investment.
Small growers deserve special attention. Assam’s tea ecosystem is no longer dominated by large plantations. Small tea growers contribute substantially to production and depend heavily on bought-leaf factories. When auction and green-leaf prices weaken, the shock travels to households with fewer financial buffers. Better price discovery, transparent quality grading, farmer producer organisations and direct market linkages can strengthen their bargaining power.
The industry must also move beyond dependence on bulk CTC tea. India’s own policy documents recognise that orthodox, green and speciality teas occupy strategically important niches where branding, differentiation and margins are stronger. Assam has an extraordinary geographical identity that can support premium orthodox tea, specialty blends and origin-based branding. The goal should be to sell less anonymous commodity tea and more Assam value.
This crisis exposes a deeper institutional question. Auctions are useful mechanisms for price discovery, but they cannot by themselves guarantee remunerative prices. The Tea Board should strengthen market intelligence, publish more granular real-time auction and production indicators, monitor unsold stocks and facilitate export-market diversification. Industry bodies, growers, buyers and governments need a shared dashboard that distinguishes temporary volatility from structural deterioration.
Tea has been Assam’s economic signature for two centuries. But heritage cannot substitute for resilience. The present price collapse amid floods and declining exports should be treated as an early warning. If Assam wants its tea industry to remain globally competitive, it must invest in climate adaptation, productivity, quality, worker welfare, financial resilience and value addition.
The real question is not whether Assam will produce tea after the floods. It will. The question is whether the people and enterprises producing it can remain economically viable when climate risks rise, export markets become uncertain and auction prices fall. A tea economy that survives only in favourable weather and strong markets is not resilient. Assam now needs to build one that can withstand both.
(The author is a Consultant to Rashtriya Raksha University under the Ministry of Home Affairs, Civil engineer and a Columnist. The Views are personal.)