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Nepal tea exporters face ongoing crisis amid Indian quality checks

Created at 30 Jun · 3:06 AM1 source↑ Market-relevant
IN SHORT

Nepali tea exporters are experiencing ongoing disruptions due to India's revised quality testing requirements. While some factories resumed operations after initial delays, uncertainty over inspection processes continues to impact trade, threatening the livelihoods of thousands of farmers and workers.

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Key Numbers

27,000 tonnesNepal's annual tea production
8,000 tonnesNepal's annual orthodox tea production
19,000 tonnesNepal's annual CTC tea production
1,000 tonnesNepali tea stranded in Nepal warehouses
300 tonnesNepali tea stuck in India
83Tea factories in Ilam and Jhapa
53Factories in Suryodaya Municipality that halted production
30Factories in Jhapa planning to suspend production
20,000Workers and farmers in Jhapa reliant on tea industry
300,000 kilogramsNepali tea held up in India under testing
700,000 kilogramsProcessed tea lying unsold in factory warehouses
2,995Farmers engaged in tea cultivation in Suryodaya Municipality
20 million kilogramsAnnual green tea leaf production in Suryodaya Municipality
33,655 ropanisLand area for tea cultivation in Suryodaya Municipality
7 million kilogramsNepal's annual tea exports
INR11,120Application fee per sample for testing in India

Who's Involved

Aditya Parajuli
President of the Nepal Tea Producers Association
Nepal Tea Producers Association
Industry body representing tea producers
Ministry of Industry, Nepal
Formed an inter-agency task force to address the issue
Tea Board of India
Introduced new quality testing requirements for Nepali tea
Dilli Shrestha
President of the Suryodaya Orthodox Tea Producers Association Nepal
Gopal Kattel
General secretary of the Suryodaya Orthodox Tea Producers Association Nepal
Punam Rai
Tea entrepreneur criticising Indian authorities' approach
Indra Adhikari
Agriculture officer at the National Tea and Coffee Development Board
Nepal tea exporters face ongoing crisis amid Indian quality checks

↳ Why This Matters

The ongoing trade dispute between Nepal and India over tea exports threatens Nepal's significant tea industry, impacting thousands of farmers, workers, and exporters. The situation highlights potential non-tariff barriers that could affect Nepal's export economy and its trade relations with its largest neighbor.

Key facts

  • India's Tea Board implemented new quality testing requirements for Nepali tea imports, causing significant trade disruptions.
  • Nepali tea factories in Ilam and Jhapa shut down operations due to halted exports and unsold inventory.
  • Producers report that laboratory test results from Indian importers are significantly delayed, preventing sales.
  • Thousands of farmers and workers in Nepal's tea sector face jeopardised livelihoods.
  • A Nepali inter-agency task force has been formed to address the trade dispute with India.

Nepal's tea industry is facing a severe crisis due to new quality testing requirements imposed by India's Tea Board, which have halted exports and led to widespread factory closures. Producers describe these measures as restrictive trade barriers, impacting thousands of farmers and workers.

The disruptions began in mid-April when the Tea Board of India introduced mandatory laboratory testing for all consignments. Initially, this halted exports for 21 days until India relaxed the rule to random sampling. However, a subsequent inspection process, where samples are collected from every bag at importers' warehouses in Kolkata, has led to significant delays in obtaining laboratory reports. This has left approximately 1,000 tonnes of Nepali tea stranded within Nepal and another 300 tonnes stuck in India, with concerns about quality degradation and financial losses.

In protest, all 83 tea factories in the eastern districts of Ilam and Jhapa shut down operations. Representatives from the Nepal Tea Producers Association have sought government intervention in Kathmandu. The association's president, Aditya Parajuli, stated that previous memorandums addressing similar issues have gone unaddressed.

Industry estimates indicate that over 300,000 kilograms of Nepali tea already in the Indian market are held up, and more than 700,000 kilograms of processed tea remain unsold in factory warehouses. Factory owners report that storage facilities are full, making it impossible to pay farmers for green tea leaves, thus forcing production halts.

The Nepali government has formed an inter-agency task force, including representatives from relevant ministries, to address the issue. Officials indicated that the matter is expected to be resolved through high-level government-to-government channels, with communication suggesting the Tea Board of India is open to diplomatic resolution.

Indian authorities stated the testing is intended to strengthen quality control and prevent adulteration. However, Nepali producers argue that quality concerns should be addressed at customs rather than preventing sales after the product has entered the market. The prolonged disruption threatens the livelihoods of thousands dependent on the sector, including nearly 3,000 farmers in Suryodaya Municipality alone.

Frequently asked questions

India's Tea Board introduced mandatory laboratory testing for all Nepali tea consignments, with samples collected from every bag at importers' warehouses in Kolkata. Obtaining test results reportedly takes over two weeks.

Many factories in Ilam and Jhapa have shut down operations due to halted exports, unsold inventory, and the inability to pay farmers for green tea leaves.

Approximately 1,000 tonnes of Nepali tea are stranded in warehouses in Nepal, and another 300 tonnes are stuck in India. Additionally, over 700,000 kilograms of processed tea remain unsold in Nepal.

The Nepali government has formed an inter-agency task force to address the issue and expects it to be resolved through diplomatic channels.

What Happens Next

01The inter-agency task force formed by the Nepali government will meet to discuss the issue.
02Nepal expects the issue to be addressed through high-level government-to-government diplomatic channels.

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How It Developed

India introduced new, restrictive quality testing requirements for Nepali tea imports.
Nepali tea producers describe the new measures as trade barriers.
All 83 tea factories in Nepal's eastern districts of Ilam and Jhapa shut down operations.
Nepal Tea Producers Association representatives traveled to Kathmandu to seek government intervention.
Exports were initially disrupted for 21 days after the Tea Board of India introduced compulsory laboratory testing.
India relaxed the requirement to random sampling instead of testing every truckload following criticism from Nepal.
The Tea Board of India introduced another inspection layer requiring samples from every bag at importers’ warehouses in Kolkata.
Weeks have passed without laboratory reports being issued, preventing sales and distribution in the Indian market.

Sources

T1
Crisis brewing for Nepali tea exporters with Indian quality checksNikkei Asia
T2
India's 'Tea Trap': 53 Factories Shut Down, 300,000 KG Stranded, and a ...globalpostheadline.com
T2
Trouble brewing for Nepali tea industry as exports to India remain haltedkathmandupost.com
T2
Indian restrictions halt Nepali tea exports, forcing factory closureskathmandupost.com

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