From the introduction of tea seeds in the late 19th century to its recognition as a global producer of fine teas today, Nepal’s tea industry has undergone a remarkable transformation. It has navigated colonial influences, royal patronage, privatization and the entrepreneurial efforts of local farmers to reach its current stature. Today, Nepal produces over 24,000 tons of tea annually including 5,800 tons of high-quality Orthodox tea.

In less than two centuries, Nepal has established itself as a respected player in the high-end Orthodox tea market. It now ranks as the 19th largest tea-producing country globally. The industry provides employment to over 70,000 workers and supports more than 21,000 tea farmers, with women making up 90% of the workforce.

Despite these impressive strides, the industry is facing challenges, particularly concerning wages and benefits for tea farmers. Nepal primarily produces two types of tea: Orthodox and Crush, Tear, and Curl (CTC). Orthodox tea is made from whole leaves using traditional rolling and oxidation processes which results in high-quality varieties such as green, white, oolong and black tea. The level of oxidation determines the flavor, aroma and strength - green tea is minimally oxidized, while black tea undergoes extensive oxidation. CTC tea, on the other hand, is processed using machines to create small, uniform pellets. This type of tea brews quickly and has a bold, astringent flavor, making it a popular choice for milk tea in Nepal.

While Orthodox tea is prized for its premium quality, CTC tea remains the preferred choice among locals due to its strong flavor and affordability. Tea cultivation in Nepal dates back to the late 19th century during the reign of Rana Prime Minister Jung Bahadur Rana. Rana had received tea seeds as a gift from the Chinese Emperor. He instructed his son-in-law, Colonel Gajaraj Singh Thapa, who was impressed by tea gardens in Darjeeling, to cultivate the seeds in the fertile soil of Ilam. This led to the establishment of the Ilam Tea Estate in 1863.

Tea cultivation soon expanded to Jhapa, where the Soktim Tea Estate was founded in 1865. Under the Rana regime, Nepal began exporting tea leaves in bulk to India due to the absence of local processing plants. However, this changed in 1978 when Nepal established its first tea processing plant in Ilam, allowing local processing instead of sending raw leaves to Darjeeling.

A century later, in 1982, King Birendra designated Ilam, Jhapa, Dhankuta, Panchthar and Terhathum as dedicated tea zones, giving further boost to the industry. A major milestone came in 1993 with the establishment of the Nepal Tea and Coffee Development Corporation, laying the groundwork for the country’s modern tea industry.

The privatization of the Nepal Tea Development Corporation marked a significant turning point, shifting the industry from state control to private sector participation. This enabled smallholder farmers to cultivate and sell tea to larger industries. Today, tea is grown at altitudes ranging from 62 to 4,700 meters above sea level, showcasing Nepal’s diverse growing conditions.

Nepal’s tea industry has experienced remarkable growth over the past few decades. During the fiscal year 2022/2023, Nepal exported 15,000 metric tons of tea, generating approximately Rs 3 billion. However, quality control remains an ongoing challenge, with India occasionally halting imports due to consistency concerns. Despite this, Nepali Orthodox tea has gained international recognition. In 2022, Nepali tea companies won gold and silver medals at the 2nd Tea Quality Competition in China, demonstrating the exceptional quality of Nepali tea.

Nepal’s Orthodox tea is renowned for its refined taste and high quality, allowing it to command premium prices in global markets. Currently, 99% of Nepal's tea production comes from the Eastern Development Region (EDR), which offers ideal climatic and soil conditions. Demand for Nepali tea, particularly Orthodox tea, extends beyond India to markets in Europe and the Americas.

Looking ahead, Nepal’s tea industry must address infrastructural and quality control issues. Achieving Good Agricultural Practice (GAP) certification—a set of international standards for sustainable and safe agricultural practices—will be crucial for strengthening Nepal’s presence in the global market. Additionally, unpredictable weather conditions pose risks, making adaptive strategies essential for maintaining consistent production.

Despite these challenges, Nepal’s tea industry holds immense potential. An estimated 62,800 hectares of land in eastern Nepal is suitable for tea cultivation, offering ample room for expansion. With a 15-year development plan initiated by the government, there is optimism for continued growth, infrastructure improvements and increased exports.

While some Nepali tea farmers have prospered, many tea workers still struggle with low wages, poor working conditions and a lack of benefits. The Labor Act, 2017 mandates a minimum daily wage of Rs 385, along with social security and medical insurance for tea workers. However, reports indicate that some workers receive as little as Rs 278 per day, with employers citing financial struggles caused by the COVID-19 pandemic and economic recession. Worker protests have occasionally disrupted the industry, leading to a 20% decline in production and an estimated loss of one billion rupees. There remains a significant gap between workers’ demands and what employers are willing or able to provide.

Nepal’s tea industry in Nepal has experienced extraordinary growth. In 1996, Nepal cultivated tea on less than 3,500 hectares of land. Today, that figure exceeds 27,600 hectares, largely due to the efforts of the Nepal Tea and Coffee Development Board and the privatization of the sector. Notably, most Nepali tea is organic, with farmers commonly using natural fertilizers such as cow urine and dung.

However, further improvements in quality control, certification, and sustainability are necessary for Nepal to enhance its competitiveness in international markets. The government’s 15-year development plan aims at expanding cultivation, upgrading infrastructure and increasing exports. As global demand for high-quality, sustainably grown tea continues to rise, Nepal has the opportunity to cement its position as a leading tea producer. By investing in infrastructure, quality control and the empowerment of smallholder farmers, Nepal’s tea industry is well-positioned for continued growth and global success.

(Kunwar is the AC-SIS at Mount Allison University and an advisor to the CEO of All Nepalese Tea and Coffee Center Pvt. Ltd.)

(This opinion article was originally published in   March 2025   issue of New Business Age Magazine.)