Abnormal surge in natural gas prices hurting tea sector, says association

NEW DELHI: An abnormal surge in prices of natural gas has become detrimental for the tea industry and the industry is hit hard by the recent sharp increase in the energy price, said industry body North Eastern Tea Association.

Notably, the Northeastern state of Assam alone produces over 50 per cent of the country's annual tea output.

From July, 2021 to April, 2022 the price of natural gas has risen from Rs 5,085.00 to Rs 21,119.57 per 1000 scum, the association said in a note.

The per scum price of the natural gas has gone up by four times during the last ten month period.

"This exorbitant hike in the price of natural gas has resulted in an increase in the Cost of Production (CoP) of Made Tea by not less than Rs 6 to Rs 8 per kg," it said.

Natural gas is used as fuel in the withering and drying of tea leaves during processing.

The Indian tea industry has been stuck in a perfect storm for the past several years on concerns such as uncompetitive prices, lack of quality crops, rising labour costs as well as subdued export demand.

"With such increase in (gas) costs, if the prices of tea at the farm gate level does not increase then survival will be at stake," the association said.

It further goes on to appeal to the government to take a serious note on the issue by taking immediate steps to curb the price of natural gas.

Also, the industry association appealed to the Union government that natural gas shall be brought under the ambit of GST in order to bring in long term sustainability in the tea industry.