The first cup of tea in the morning is not just a feeling of warmth, it is also a story connected to the hills, the plains, and the sweat of thousands of farmers and laborers. In Nepal, tea has now gone beyond the boundaries of a mere beverage and has become the backbone of the rural economy and a basis for export potential.

According to the National Tea and Coffee Development Board, the first commercial tea plantation was started by Budhkaran Tea Estate in Jhapa. In 1978, the first tea processing factory was established in Kanyam, Ilam as Nepal Tea Development Corporation.

Although the history of tea cultivation in Nepal began in the latter half of the twentieth century, its economic presence has become stronger in recent decades. Tea cultivation, which started in Ilam and Jhapa, has now become the mainstay of livelihood for thousands of farmers. Orthodox (leaf tea) and CTC (black) tea are making a name for themselves in the international market.

However, experts say that since domestic production cannot be directly transported to third countries, Nepali tea is still exported to India in raw or semi-processed form. Due to the traditional production system and weak marketing, the market for Nepali tea is largely limited to India. According to entrepreneurs, most of the tea produced in Nepal reaches India and is exported to third countries from there. The data of the Customs Department also shows that more tea is exported to India than to other countries.

However, looking at the statistics, tea is one of the few agricultural commodities of Nepal that has been consistently generating trade profits for a long time. According to the board, tea trade is making a positive contribution to Nepal's trade balance due to production expansion, increase in export prices and reduction in imports.

In the fiscal year 2071/72, Nepal exported tea worth about Rs 2 billion, while importing only Rs 93.6 million. More than 23.1 million kg of tea was produced that year. And, it seems that the profit from the tea trade is about Rs 1.91 billion. Since then, exports have been gradually increasing, while imports are comparatively decreasing. Trade expert Ravi Shankar Sainju says that the potential of Nepali tea has not yet been fully utilized. 'Sri Lankan tea is known all over the world as 'Sri Lankan Tea,' said Sainju, 'in the same way, 'Nepali Tea' can be made an international brand.'

If tea is exported to third countries not in raw form, but through processing, packaging and its own brand, additional value is added. ‘It is estimated that tea trade worth 9-10 billion rupees is currently taking place, both formally and informally,’ says Sainju. ‘If branding is done, annual exports of 15 to 20 billion rupees are possible.’ In the fiscal year 2074/75, tea exports earned more than 3.25 billion rupees, while imports were limited to 120 million rupees. After 2077/78, the tea trade became even more profitable. In the fiscal year 2078/79, tea exports of more than 16.5 million kilos generated a revenue of 3.93 billion rupees, while imports were limited to 74.3 million rupees, resulting in a profit of about 3.80 billion rupees.

In the fiscal year 2080/81, tea production reached 26.9 million kilos. In that year, exports of 3.62 billion rupees were limited to 30 million rupees. In the fiscal year 2081/82, tea exports exceeded 4.59 billion rupees, which is the highest ever. In the same year, tea imports worth only 92 million rupees resulted in a net profit of 4.5 billion rupees from the tea trade.

But there is another reality along with this picture of profit – since a large portion of exports still go to India in raw or semi-processed form, real value addition has not taken place in Nepal, experts say. Aditya Parajuli, president of the Nepal Tea Growers Association, says that both CTC tea production and consumption are high domestically. ‘The country produces the most CTC tea, and this is where it is consumed,’ Parajuli said, ‘but this year production has decreased due to drought and pests.’ 

Parajuli said that since India is the main market for CTC tea, exports fluctuate from year to year. ‘When consumption increases in Nepal, exports decrease, and when consumption decreases, exports increase,’ he said. Orthodox tea, on the other hand, is consumed in limited quantities in Nepal and is mostly exported via India. 

According to the National Tea and Coffee Development Board, tea was planted on an area of ​​20,760 hectares in Nepal in the fiscal year 2080/81. 27 million kg of ready-made tea was produced that year. There are 15,203 tea farmers, 171 tea estates and 120 small and medium tea processing centers operating across the country, providing employment to more than 60,000 people, the board said. 

The board said that the tea sector is playing an important role in creating rural employment and earning foreign exchange in the face of the country's widening trade deficit. In the five months of the current fiscal year, tea worth Rs 2.24 billion 1.426 billion was exported, while tea worth Rs 30 million was imported. 

The highest amount of tea was black tea worth Rs 1.866 billion. And, green tea worth Rs 144 million was exported. Tea has been exported to various countries including Germany, America, China, France, Canada, Japan, Taiwan.

55 percent of CTC (black tea) is consumed in Nepal and 45 percent is exported, said Deepak Khanal, director of the board. Khanal says that 97 percent of the total tea exports are exported to India. ‘CTC tea is produced in large quantities, and its market is India,’ he said. ‘Some entrepreneurs export orthodox tea to third countries. The rest is exported to India.’ Suresh Mittal, former president of the association and managing director of Mittal Tea Estate, says that even though CTC tea has not been successful in exporting to third countries, it has not been successful. 

‘50 percent of CTC tea is consumed in Nepal and 50 percent is exported to India. Even though we have exported to third countries other than India, we have not been successful,’ Mittal said. ‘Our production and logistics costs in CTC are high. African tea is much cheaper than Nepali tea. That is why we are not able to export to third countries.’ Therefore, Mittal said that we have to depend on India for tea exports. ‘Nepal has a high production of orthodox tea, its organic tea also goes to third countries, the rest is exported to India,’ he said. ‘10 percent of orthodox tea is consumed in Nepal. 10 percent goes to third countries and 80 percent to India.’

Mittal said that very little tea is exported to countries including Japan and Australia. ‘The tea that goes to India is also mixed with Indian brand tea and goes to third countries,’ he said. He said that Nepal’s tea market is worth 9 to 10 billion rupees. Orthodox tea is mainly produced in the hilly districts of the eastern part of the country (Ilam, Panchthar, Dhankuta, Tehrathum, Solukhumbu, Udayapur, Sankhuwasabha and Bhojpur) as well as Sindhupalchowk, Kavre, Makwanpur, Lalitpur, Ramechhap and Kaski in the central part, according to the board.