Report

India tea market is projected to witness a CAGR of 3.60% during the forecast period FY2026-FY2033, growing from USD 11.23 billion in FY2025 to USD 14.90 billion in FY2033. Several key factors drive the growth of India tea market, primarily the increasing domestic consumption, gradual rise in export demand mainly from the countries such as Russia, UAE, Iran and UK and demand from health-conscious consumers for organic and wellness tea.
India is the second largest tea producer in the world, accounting for a whopping 23% of the world's total tea production. It is also the largest consumer of tea with an estimated consumption of 1168 million kgs in 2022. India's unique position of being the second largest producer and largest consumer at the same time makes it a market full of opportunities. India is among the top 5 tea exporters in the world making about 10% of the total exports.
Dominance of Black Tea in Local Market
The Indian tea market is primarily segmented into four categories: black tea, green tea, herbal tea and specialty teas, and others. Out of these four, black tea enjoys dominance at 70% of total tea consumption in the country. The reason for this dominance is rooted in India's historical and cultural legacy. Assam and Darjeeling tea are particularly seen in high regard due to their rich flavors and quality.
The types of tea exported through India are black tea, green tea, herbal tea, masala tea and lemon tea with black tea having a majority of 96% of total market share.
Exports play a crucial role in the Indian tea industry, contributing significantly to the economy. India is one of the largest tea exporters in the world with an export value of around USD 776 million in 2023-24 and USD 765 million in 2022-23. The primary export market includes the Middle East, the UK, the United States and Russia, where Indian teas are celebrated for their quality and distinctive flavors. Assam and Darjeeling teas are highly sought after in international markets, often commanding premium prices. As for the figures the Indian tea industry saw a significant rise in 2024, with a total of 255 million kgs, it was a decade high with an increase of 10% from 2023. The demand increased mainly from the countries such as UAE, Russia, and Iraq. With increased demand, Assam and West Bengal, that are the major tea producers of the country, saw a price hike of 20% in leaf category and 26% in dust category.
Rise in Demand for Organic and Herbal Tea to Drive Market Growth
For the last years there has been a significant rise in the demand for organic and herbal tea due to a shift in the consumer's attitudes towards health and wellness. This has produced a new opportunity for the business to start a line of products, which has pushed for diversification in the final product.
Most significant reason for the rise of demand in organic tea is health benefits attached to it. Herbal teas are known for their stress relief and calming properties. While some of them are also used for sleeping aid and for digestive health.
Eco-Friendly practices and diverse offering range also attract consumers towards this segment. With the rise in concern for synthetic pesticides and fertilizers, consumers prefer organic tea which is grown only through natural processes.
For instance, Tata Consumer Products, a major multinational corporation (MNC) in the fast-moving consumer goods (FMCG) sector, made a significant move towards organic and herbal tea in India by acquiring Organic India. This acquisition was announced on January 12, 2024, and marks a strong step towards expansion of product portfolio and creation of new platform in health and wellness section.
Government Measures to Support Market Growth
The Government of India plays a crucial role in developing the market it recognizes the sector plays an integral role in nation's economy, culture and agricultural landscape. With India being one of the largest producers and consumers of tea in the world, government's involvement encompasses various dimensions including policy formulation, financial support, research, infrastructure development and promotion of sustainability.
The government has established a robust policy framework to guide the tea industry. The Tea Act of 1953 serves as a regulatory backbone ensuring orderly growth, quality control and fair-trade practices. The Tea Board of India, established under this act is responsible for implementing policies that support tea cultivation, production and marketing. It also provides financial assistance in the form of subsidies, grants and loans through various schemes aimed at enhancing production capabilities and improving living standards for plantation workers.
The government of India also invested in research and development through institutions like Tea Research Association aimed to develop new and better tea varieties, improve yield and address issues like pest management and climate resilience.
For instance, Government of India announced the Tea Development & Promotion Scheme on 03-10-2024 with an overall budget of USD 77.67 million. The duration of the scheme is from 2023-24 to 2025-26 (31st March 2026). The scheme has several components with a focus on Plantation Development and Quality Up-gradation, Tea Promotion and Market Support, Technological Intervention, Research and Development and Welfare and Capacity Building measures.
Hilly Terrains of North-East India Contributes up to 80% of Total Market
In India, Tea Industry is dominated by West Bengal and Assam in east and Kerala and Tamil Nadu in the south, in which the eastern states contribute up to 80% in total production. Due to climate of heavy rainfall, humidity and warm temperature that these states experience, tea cultivation becomes quite favorable here. With the abundance of alluvial soil and hilly terrains, the growth conditions of tea plants excel here.
The reason for development in the tea industry in these is geographical as well as political, Assam and Bengal have a history of tea production and investment in the infrastructure from colonial era. Continuing down the line the state governments have also maintained the practice of infrastructure development by investing in transportation routes. Recently there has been a new wave of Tea Tourism which opens the door for new stream of economic development.
For instance, according to report published by Tea Board of India, in 2024 from January to December, total production in North India was 1057.98 million kgs with Assam and West Bengal contributing 649.84 million kgs and 373.48 million kgs respectively.
Future Market Scenario (FY2026 - FY2033F)
- Tea market will continue to grow due to strong demand from domestic consumers and increasing number of tea enthusiasts around the globe.
- The market will grow strongly based on continued government support and subsidies for developing individual businesses.
- The demand for tea will continue to expand further with the growth of e-commerce and institutional sales.
- The demand for green, herbal and flavored tea will continue to increase due to rising health concerns and the demand for organic foods.
Key Players Landscape and Outlook
The tea market in India is highly competitive, besides being constantly influenced by many factors such as cyclic climate and pricing, competitive technological advancements, and geographies. Some of the expanding factors for this market are the developing health consciousness with increasing tea enthusiasts and the expanding global market.
One of the newest major companies to enter the tea business is PepsiCo, which lined its own line of ready-to-drink tea under the brand name Pure Leaf. This expansion reflects the growing demand for healthy beverage options. Additionally, companies like Nestle have also made recent moves to diversify their portfolios with Tea products, including acquisition of brands like Blue Botton Coffee that includes Tea offerings. These entries showcase a trend of larger corporations recognizing the potential in the tea market.