Tea Industry in India

In this article we will discuss about the tea industry in India:- 1. History of the Tea Industry 2. Ownership and Management of the Tea Industry 3. Labour and Wages.

History of the Tea Industry:

Although traders had known of the existence and use of tea in China, the art of its cultivation was unknown both in India and Europe. China was the principal source of supply to the U.K., and of this profitable trade, the East India company held the monopoly.

As early as 1788, Sir Joseph Bank had suggested the growing of tea in India so that, in the event of trouble with the Chinese authorities, and alternate source of supply could be available. Nothing, however, come out of this proposal for the reason that the East India company, earning monopoly profits out of the tea-trade with China, was just not interested.

A change came about in 1833 when the company’s monopoly of this very lucrative trade ended. It ‘quickened their perceptions’ of the advantages likely to come by the establishment of the tea industry in India. At the same time, the Charter Act permitted Europeans to own land in India.

Thus was opened the possibility of the growth of this industry in India. In 1834, Lord William Bentinck, unaware that the tea-plant was indigenous in Assam and had earlier been discovered by Robert Bruce in 1821 and Scott in 1824, appointed Officers to collect Chinese seed as well as labour.

While one such mission was in China, Capt. Charlton and Jenkins rediscovered the wild tea plant in Assam and attention was, therefore, directed to the indigenous stock.

Although, the first samples of tea grown on the govt. Plantations in Assam were sent to England in 1838 and the first Calcutta sale held in 1841, it was not until 1852 that the competitive quality of the Indian tea was finally established. Thereafter, the progress was rapid.

The first garden in Cachar was opened din 1855, in Syhct and Darjeeling in 1856 and in Chittagong and Chhota Nagpur about 1862 The first private company to be formed was the Assam Tea Company ltd. in 1839 with a capital of £ 5 lakhs. This company purchased the govt. Plantation at Sibsagar and held a virtual monopoly for ten years.

The early years of tea planting were marked by many failures. “Many mistakes were made as to site, soil, cultivation and manufacture” which caused failures, loss and disappointment. Even the monopolistic Assam Tea company paid no dividend for the first 13 years and had, at one lime, all its capital dissipated.

The tide, however, turned in 1853 and then there was a reckless extension of tea cultivation and speculation in the gardens. In a matter of 16 years between 1853-1869, the number of tea-estates in Assam, which was then the most important tea production area in India, multiplied by 26 times, area under cultivation rose by more than 10 times and production by more than 12 times.

The govt., was unable “to keep up with surveys and” many a tea garden was sold and resold though it lay in the midst of a trackless jungle and was miles away from the nearest tea-shrub. Companies were formed to take over, at fabulous prices, most of the already established plantations.

The inevitable crash followed in 1866; the ‘bubble’ companies failed and the growing of tea became very unpopular. Fortunately, the depression was short-lived and planting came into full swing by 1871.

The last thirty years of the 19th Century constitute the most important period in the history of the development of tea industry in India. Most of the establishment of plantations, their expansion and consolidation look place during these three decades.

The area under tea rose to 4.3 lakh acres in 1896 and production to 209 million pounds in 1903. Region-wise, Assam occupied the first position with 67.4% of the total area in 1896; Bengal followed with 24.3%.

Besides, tea had begun to be grown elsewhere in U.P. Punjab and the Nilgiris. The progress of the industry was reflected in rising exports, the value of which increased from Rs. 2.6 crorcs in 1876—77 to Rs. 8.6 crores in 1903.

The performance in the export field was the more remarkable from another angle. In 1866, of the total imports of tea into the U.K., only 4% were Indian and the rest Chinese. In 1903, of the total imports, 59% were Indian, 31% from Ceylon and only 10% were from China.

This expansion of the industry was greatly facilitated by the construction of the rail-line between Siliguri and the Ganges in 1878 and between Assam and Chittagong in 1892. Again, it was during this period that the transition from proprietary properties to partnerships and then to corporate ownership took place.

Producers’ organisations, district-wise and industry-wise, also took shape during this period, the Indian Tea Association having been formed in 1881. Thus, in these three decades, the foundation of a great tea industry had been laid while Imperial China still carried the illusion that her tea held sway in the world’s tea-pot.

The increase in area as well as production, at a time when the U.K.’s demand for tea was almost stationery, brought about a fall in prices. Consequently, between 1902-06, area under lea declined and a depression set in. After 1906, however, the U.K.’s market revived. In addition, an important and growing market was found in Russia and progress was again resumed.

The First World War:

The industry was doing unusually well when the I world war broke out. Prices rose and, both in production and exports, records were rapidly broken. Production rose from 209 million lbs. in 1903 to 380.4 million lbs. in 1918 while exports increased to 323.6 million lbs. valued at £ 11.85 million.

The average yield per acre more than doubled-from less than 300 lbs. to 600 lbs. per acre in 1919. Early in 1917, owing to shipping shortage, it became necessary to restrict the export of tea from India to the United Kingdom.

The prices consequently declined and the prospects became gloomy. To help the industry tide over the crisis, the Food Controller formulated, in November 1917, a scheme for the purchase and shipment of 40% of the Indian crop. The scheme, operated through the Tea commissioner at Calcutta, proved so successful that the Food commissioner ultimately took all the tea offered to fill the available tonnage.

Next year, the commissioner took 66% of the crop, thus relieving the industry considerably. The war years were distinctly good years for the industry. The prices from 1914-17 were above the pre-war level; the wages of labourers, on the other hand, were stationery.

The result was an era of high profits. New gardens and ex­tensions were planned while old gardens rapidly increased their production. In Assam alone, the area under tea increased by 30,000 acres, in Bengal and Madras by over 10,000 and in Travoncore by 6000 acres.

The break came in 1919 and for the next two years, there was severe depression in the industry. The year 1920-21 was a most disastrous one for the tea companies.

Unlike other industries, however, recovery was remarkably rapid and from 1921-22 began another period of rising prices and increased production which beat even the records set up during the war. Prices were again depressed in 1925 but a repetition of the disaster of 1920 was prevented by limiting production.

These occasional setbacks notwithstanding, the post-war period was generally of high profits. The oldest company registered in England, the Assam Tea company, paid an average of 22% dividend during the ten years, 1917-26 while for the same period, the Jorhat company paid an average of 30% annually.

In 1927, there were 4,289 tea plantations in India, representing a total investment of £ 200 millions. Of this amount, about 1/4 was of companies registered in India and 1/4 belonged to the companies registered in England

The onset of the Depression signalled the arrival of another difficult period for the industry. There already was considerable overproduction due to excess production in Jawa and Sumatra. As a result, producers of tea were faced with declining prices and accumulation of stocks.

The price of black tea fell from 75 paise per lb. in March, 1929 to about 56 paise in March, 1930. Consequently, both the volume and value of tea exports declined, the fall in value being greater than the fall in Volume.

This is brought out by the fact that in the year 1932-33, 379 million lbs. of tea earned India only Rs. 15.2 crores while 377 million lbs. of lea earned India only Rs. 15.2 crores while 377 million lbs. exported in 1929-30, brought Rs. 26 crores.

In order to arrest the decline in prices, a plan was adopted in 1932 under which, the principal producing countries undertook not to export more than a given quantity in any year, the quantity to be revised annually.

But it soon became evident to the Indian Tea Association that “the control of exports was not in itself the Alpha and Omega of recovery.” Therefore, control of exports was supplemented by the control of production.

A scheme of voluntary restriction of output was put into operation with the support of 93% of the producers in India. At the same time, propaganda to increase the sale of tea and to encourage tea drinking in India was carried on by the Indian Tea Market Expansion Board.

The Second World War:

The outbreak of the second world war gave rise to new conditions. In the U.K., the entire tea trade passed under the control of the govt. A tea controller for India was appointed to administer the Emergency Scheme.

There was a strong demand for practically all kinds of tea and exports to U.S.A., Canada and Australia recorded substantial increase. Total production rose from 437 million lbs. in 1938-39 to 534 million lbs. in 1945-46 while exports increased from 328 million lbs. to 382 million lbs. in 1941—42.

Expansion of markets for Indian tea brought about a continuous improvement in the profits of tea companies, the average dividend having risen from 13.6% in 1938 to 26% in 1942.

In 1947, a total of 3.1 lakh hectares was under tea cultivation and total produc­tion stood at 227 million kg. As a result of the Partition of the country, 15% of this production went over to Pakistan, India retaining the remaining 85%, In-spite of this setback, the industry continued to record steady progress up to the end of 1951.

In early 1952, following to decontrol of tea in Great Britain and the consequent stoppage of its bulk purchase by the British Ministry of Food, prices started falling heavily. Between January to March, 1952, they went down by as much as 39.9%.

Unable to face the situation, many small gardens, 20 in North East India alone, closed down while many more in Assam and Bengal were threatened with closure. The govt., and the Reserve Bank promptly adopted a number of measures like the postponement of the implementation of the Minimum Wages Act and special credit facilities to banks lending to tea gardens.

Fortunately, demand revived within a short period of time and tea-prices rose once again. Between 1950-1965, area under tea plantation increased by 8%, production by 28% and yield per acre by 18.3%. As for exports, they rose by 23% between 1950—63. Thereafter, they continuously declined till 1966.

Although, the output of tea continued to expand, India’s share in the world’s production and trade declined. In respect of production, India’s share fell from 43.6% in 1950 to 34.5% in 1966 while her share in world exports declined from 45.6% to 31.1%.

Not to speak of the world markets, the importance of tea industry even in India’s exports declined. In 1955-56, tea exports constituted 18.5% of the total Indian exports; in 1965-66, its share fell to 14.3%. There is no doubt that the industry’s failure to hold her own share was not due to any shortfall in production or productivity.

The reason was that ever since India withdrew from the International Tea Market Expansion Board in 1952, her com­petitors, through aggressive salesmanship, were able to snatch a larger share of the world market. Between 1960-61, India, for example, spent Rs. 8.3 million on export promotion of tea whereas Ceylon spent Rs. 30 million in the same period and for the same purpose.

Realising the seriousness of the problem, the Indian Tea Board was set up in 1964 to help promote the tea drinking habit in India and abroad. One thing, however, is note worthy. Despite the stresses and strains the industry had to suffer, the Tea Finance committee, popularly known as the Chari committee, found that the gross profits of the industry increased by 44.5% between 1950—65.

Ownership and Management of the Tea Industry:

Since its inception, the British investors evinced keen interest in the tea industry. Many of the early tea gardens were established by retired Government officials or army officers. However, on account of the difficulties of manage­ment, financial stresses as also the desire of officers to go on furlough, more and more companies entered the field.

As a result, the industry in the North East came to be managed and controlled by big managing agency firms which laid down the policy, controlled expenditure, appointed the manager and other key staff. Such big names as Octavious steel. Begg and Dunlop, Williamson Magor, Andrew Yule, Shaw and Wallace and Duncan brothers came to dominate the industry.

It is difficult to say why Indians did not enter the industry. May be the nationalist against the recruitment of ‘coolies’ for the Assam tea gardens and against tea-drinking as such acted as a deterrent. It was only after the I world war that there was some shift of Indian capital and several Indian tea companies were formed between 1917—1925.

However, the industry still continued to be under the stranglehold of foreign capital. In 1921, lea gardens controlled by oil Europeans constituted 65% of the total. Thirty years later in 1951, the cabinet Secretariat found that foreign capital controlled 86% of the tea industry.

Not only the production and export of tea, even retail distribution was controlled and monopolized by two British firms, Lipton and Brooke Bond, which together handled 85% of the retail trade in India. These sterling companies made profits equal to investment every five years. Between 1956—65 alone, they remitted, by way of profits, a sum of Rs. 23.82 crores to the U.K.

Labour and Wages of the Tea Industry:

The story of the tea industry would be incomplete without an account of the hardships and sufferings of workers who cleared the marshy jungles and established and prosperous gardens. Up to 1860, the local labour supply, though scanty, was yet sufficient for the needs of the tea gardens.

During the speculation craze, demand for labour of the tea gardens. During the speculation craze, demand through the agency of contractors.

These contractors, unprincipled as they were, lured poor and innocent peasants into signing contracts by narrating fantastic stories of abundance, high wages and future prospects. The means of transport were then imperfect and a large proportion of them, about 60 per thousand, died on the way.

It was not only on the way that the tea labourer met trouble. His work was hard and of a sort to which he was not used. Housing was .generally inadequate and food was scarce and extremely dear in those distant unsettled regions. As against this life, wages were as low as Rs. 2.50 per month in 1857 and Rs. 6.0 per month in 1901. Undernourishment and disease soon incapacitated many coolies for the day’s work.

They could not run-away till the contract expired. Not to risk any chance of their escape, their housing colonics were often surrounded by high palisades outside which coolies were not allowed at night. Every outlet was guarded by sentries and, if caught, coolies were tried and flogged and the reward paid to the captors was deducted by way of fine from their future earnings.

So unbearable were the conditions that, among a group of about 50,000 coolies, 13,905 died, 4,425 deserted and disappeared in the forests within a year and a half. Such were the conditions of the industry where wages were always some­what below those in factories-being only Rs. 10.68 per month in 1929-30.

It is true that, besides wages, workers also received certain other concessions such as free housing and free medical aid, free fuel and supply of tea, rice and cloth at less than the market rates, but, according to NM Joshi, the total worth of these concession was about Rs. 2/- per month per family.

So glaring were the abuses that even an unsympathetic govt., was forced to intervene. Legislation to ensure proper conditions of work began in 1863 and was extended and consolidated in regulations laid down by the Assam Labour and Emigration Act of 1901 and 1915, the latter of which abolished recruitment by contractors.

Instead, a labour Board was appointed to supervise recruitment of labour under contract for the plantations. The law regarding the breach of contract was drastically revised and penal section of the contract was abolished in 1926.

The Tea Districts Emigrant Labour Act, 1932 further tightened control over recruitment and also provided for repatriation, after the expiry of three years, at employers’ expense. It was the Plantation Labour Act, 1951, which, besides regulating hours and conditions of work, also required the Plantations to provide housing accommodation to their resident workers and families and to main­tain hospitals and dispensaries.