Nepal's tea exports fell 15% after India's testing rules left tonnes stuck at the border
Two months of mandatory laboratory checks closed factories in Ilam and Jhapa. India has eased the rules, but growers who sell nine-tenths of their orthodox tea there are wary.
Nepali tea has had a bruising year in its only big market. Exports through Kakarvitta, the eastern border post that handles most shipments to India, fell to 13,045 tonnes worth Rs 3.53bn in the 2025/26 fiscal year, from 15,311 tonnes worth Rs 4.17bn a year earlier, according to the Kakarvitta Customs Office, as reported by ShareSansar. That is a drop of 14.8% in volume and about Rs 640m in value. Tea is the second-largest export through the post after cardamom. The chief customs administrator blamed price swings in India, non-tariff barriers related to quality testing and shifts in demand.
The testing problem came to a head in May. The Tea Board of India introduced a standard operating procedure on 1 May requiring mandatory quality testing of every consignment from Nepal, The Kathmandu Post reported. Results took more than two weeks, during which tea could not be sold, and each sample cost INR 11,120 plus tax to test, the Post reported in early June.
Factories shut, warehouses filled
The effect on the eastern hills was quick. In mid-June, 53 factories in Ilam's Suryodaya Municipality announced they would close, The Kathmandu Post reported, with more than 300,000 kilograms of Nepali tea held in Kolkata awaiting inspection and over 700,000 kilograms unsold in Nepal. By the end of June the paper counted 53 factories in Ilam and 30 in Jhapa that had stopped fully or partly, and about 1,500 tonnes stuck in Nepali warehouses.
India then relaxed the rules. India's Food Safety and Standards Authority moved to risk-based checks under which only 20% of consignments are randomly selected for testing, the Post reported on 29 June, and exports resumed after about two months, PTI reported in early July. The president of the Nepal Tea Producers Association told the Post that the obstruction had been repetitive, a sign that producers do not expect the calm to last.
The disruption fell on an industry already under strain. Tea output dropped 25% to 30% in the previous fiscal year because of a looper pest infestation, and CTC production fell by about half on lower green leaf supply, The Kathmandu Post reported.
A single customer
Nepal produces more than 27,000 tonnes of tea a year, about 8,000 tonnes of it orthodox leaf and 19,000 tonnes the cheaper crush-tear-curl (CTC) type used in milky tea, according to the Post. It sends nearly 90% of its orthodox tea to India; third countries took just 11.4% of orthodox exports, the paper reported. PTI, quoting the National Tea and Coffee Development Board, put India's share of all tea exports at about 86%, and the industry's direct workforce at more than 60,000.
The board's director told PTI that the focus was now on improving quality and diversifying markets, naming China, Pakistan, the United States and Europe as possible alternatives. That ambition is not new: The Rising Nepal reported in 2024 that Ilam entrepreneurs were already courting buyers in Sri Lanka and the United Arab Emirates after earlier trouble at the Indian border.
What to watch
The monthly customs data for the first quarter of 2026/27 will show whether shipments through Kakarvitta have recovered under the 20% sampling rule. The bigger test is whether the 2027 first flush, Nepal's most valuable orthodox crop, reaches buyers in India without fresh checks, and whether any of the alternative markets begin to take meaningful volumes.
How this story was made: researched and written by The Standard’s desk with AI assistance, from the published reporting and official data credited below, and checked against those sources. Our standards.
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