Nepal: Tea producers shut factories, say India's strict import rules complicating exports

More than four dozen orthodox tea producers in Nepal have shut down their factories starting Monday, as India's stringent quality-testing procedures have disrupted the smooth export of one of Nepal's key export commodities.

Producers of CTC tea have also announced that they will shut down their factories starting Wednesday for the same reason.

More than 90 per cent of Nepal's orthodox tea is exported to India, while around 60 per cent of the CTC tea produced in the country is sold in the Indian market, according to associations representing tea factory owners.

The Standard Operating Procedure (SOP) implemented by the Tea Board of India on May 1 has made quality testing mandatory for every consignment of tea exported from Nepal.

Nepal tea factory owners say the new system has significantly increased business risks, as it takes more than two weeks to receive test reports, tea cannot be sold until the reports are issued, and consignments that fail the test must either be destroyed or returned.

"Starting Monday, we have shut down our factories," Dilaram Shrestha, President of the Suryodaya Orthodox Tea Producers’ Association, told IANS. "There are 53 tea factories affiliated with our organisation, and all of them have now been closed."

Most orthodox tea producers in Nepal are members of the association.

"Large quantities of processed tea destined for the Indian market have remained unsold. Test samples are being collected, but reports are often delayed for months. As a result, tea entrepreneurs and factories have been severely affected," the association said in a statement.

"We would like to inform all tea farmers and stakeholders of this situation and sincerely apologise for the inconvenience that may result from disruptions to tea processing and green-leaf procurement activities."

According to industry representatives, around 300,000 kilogrammes of processed tea are currently stuck in warehouses in Kolkata, India, while more than one million kilogrammes remain unsold in factories across Nepal. They say the situation has disrupted the production cycle and placed financial pressure on farmers, workers and factory owners alike.

"It takes weeks to obtain a test report, and if a sample fails, the tea must either be brought back to Nepal or destroyed. This imposes a huge financial burden on Nepali tea producers," Shrestha said.

According to him, Nepal exports around 6–7 million kilogrammes of orthodox tea to India each season.

Dipesh Dhakal, a member of the Nepal Tea Producers’ Association, the representative body of CTC tea producers, told IANS that CTC factories have decided to suspend operations from Wednesday due to complications created by the Indian regulations. There are 30 tea factory owners associated with this organisation.

"Indian buyers are also reluctant to purchase our tea because of the risks associated with sample failures," he said. "Once the tea crosses the border, we cannot assume full responsibility for it. As a result, tea exports have almost completely stalled."

Previously, Indian authorities tested only selected samples, and once those samples passed inspection, entire consignments could be exported to the Indian market.

The stricter Indian quality-testing regime comes amid repeated complaints by Indian tea growers about the influx of Nepali tea into the Indian market.

In October 2024, small tea growers in North Bengal intensified their demand for restrictions on the entry of Nepali tea into India and threatened to stage an indefinite sit-in protest at key points along the Indo-Nepal border.

According to Nepal’s Trade and Export Promotion Centre, the country exported 11,393 tonnes of tea worth NPR 3.35 billion during the current fiscal year 2025–26 up to mid-May. The fiscal year ends in mid-July.