Nepal tea factories to shut as India tightens export rules, shipments stuck

Fifty-three tea factories in Nepal's Suryodaya Municipality will cease operations on June 15, a move driven by India's tightened export regulations for Nepali tea. The Suryodaya Orthodox Tea Producers Association Nepal cited an inability to sell processed tea, full storage facilities, and mounting debts to farmers for purchased green tea leaves as reasons for the shutdown.

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Tea processed after purchasing green leaves from farmers cannot be sold. Warehouses are full. We are unable to pay farmers, so continuing operations is no longer possible.

Shipments of Nepali tea have been held up in Kolkata for weeks following new procedures from the Indian Tea Board. Over 300,000 kilograms of tea face quality inspections, while an additional 700,000 kilograms remain unsold in Nepal. Association chair Dilli Shrestha stated that continuing operations is impossible given the collapse of sales and storage capacity.

The crisis impacts the peak first flush season. India's new Standard Operating Procedure, effective May 1, mandates quality testing for every export consignment. Test results can take over two weeks, during which time tea cannot be sold. Failed inspections lead to destruction or return, increasing exporter risk. Association general secretary Gopal Kattel suggested the measures appear to be an attempt to block Nepali tea rather than a genuine quality control effort.

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India has often created hurdles in the past under various pretexts. But this time, even tea that has already reached the market cannot be sold. It appears less like a quality control measure and more like an attempt to block Nepali tea from the market.

Industrialist Punam Rai criticized the restrictions as discriminatory, arguing that inspections should occur at the border, not after products reach the market. The shutdown directly affects approximately 2,995 tea farmers in Suryodaya Municipality alone. The municipality has urged Nepal's Ministry of Foreign Affairs to engage in high-level talks with India to resolve the issue, labeling the Indian Tea Board's actions as a non-tariff barrier.

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If the issue was truly quality, inspection should happen at the border. Blocking sales after the product has already reached the market is not justified in any way.