Tata Tea Ltd has decided to diversify its business activities to tackle the emerging challenges faced by Indian tea producers. Tea barons in India had warned that the survival of their industry is threatened by plunging auction prices, a slump in export and falling quality. Mr V. Venkiteswaran, executive director, Tata Tea Ltd said: "Though there are signs of revival in the tea industry by the middle of the current financial year, we are in the process of taking effective steps to face threats which are likely to emerge in the near future."

Planting medicinal plants with high export value, foraying into the organic tea market, launching iced tea carrying out cost reduction exercises will be the major steps that the company will take, Mr Venkiteswaran said.
Mr P. Haridas, deputy general manager, research and development, Tata Tea said that there is a good potential for medicinal plants in the domestic as well as international market.

"We have already started planting Vetiver grass, a medicinal plant with high export value and initiated talks with various ayurvedic drug producers like Kottakkal Aryavaidyasala in Kerala to supply medicinal plants for the production of drugs." A kilogram of Vetiver grass is priced between Rs 7,000 to Rs 9,000 in the international market. Tata Tea officials said that with a view to improve the quality of the tea a major production restructuring initiative has been undertaken at its south India plantations.

The company has identified production techniques which have enabled it to manufacture high quality tea equivalent to the Sri Lankan crop in its south India plantations. The products from the South will now earn significantly higher realisations. The company has started producing Assam like superior quality tea in the South, which is being exported to Tetley for use in its brands, the officials said.

Mr Venkiteswaran added that the company is also exploring possibilities to export organic tea to the Europe and US markets where the demand is comparatively high compared to other world markets. Currently, out of the total 60 million tonnes annual tea production of Tata Tea, 50 per cent comes from South Indian plantation firm.