KATHMANDU, Dec 28: Nepal exported tea and coffee worth nearly Rs 4 billion in the first five months of the current fiscal year, but producers have expressed concern after the government discontinued export subsidies, which they say are crucial for sustaining the sector.
By November of the current Fiscal Year (FY) 2025/26, tea and coffee exports totaled Rs 4.03 billion. Tea alone accounted for around Rs 2 billion. Producers say the suspension of the cash incentive program previously provided to promote tea exports has created uncertainty and financial pressure on farmers and entrepreneurs.
The Suryaodaya Orthodox Tea Producers Association (SOTPA) Nepal in Ilam has demanded the continuation of export subsidies, stating that such incentives have played a key role in the growth and expansion of the tea industry and in supporting the livelihoods of farmers and businesses.
SOTPA Vice-President Gyani Limbu said the absence of export incentives would negatively affect production, exports, and overall national output. He urged the government to reinstate the export subsidy program targeting third-country markets starting from FY 2024/25.
“If the proposed export-related guidelines are implemented as they are, 95 to 97 percent of tea entrepreneurs will be directly affected,” Limbu said. “Such a policy would further weaken Nepal’s tea exports.”
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He added that less than two percent of Nepali tea currently reaches third-country markets, and introducing restrictive policies at this stage would severely harm the industry. Limbu also recalled that interest subsidies and agricultural incentives previously provided to farmers had significantly helped expand tea cultivation and should be continued.
The SOTPA has drawn the attention of the Ministry of Agriculture and Livestock Development, the Ministry of Industry, Commerce and Supplies and the Ministry of Labour, Employment and Social Security, stating that banking mechanisms and state support systems have not provided adequate relief to the tea sector.
India remains the largest market for Nepali tea. However, producers say India often restricts imports during peak production seasons citing non-technical reasons. “Even after certification from the Central Food Laboratory declaring the tea fit for consumption, India frequently blocks shipments claiming quality issues,” Limbu said.
Tea entrepreneur Sujan Dhungel also expressed concern that the new export procedures being drafted fail to include industries exporting tea to second countries. “There are indications that the new guidelines will not accommodate us,” he said, stressing that the upcoming policy should cover exporters supplying both second and third countries.
At a time when Nepal remains heavily dependent on agricultural imports, farmers and entrepreneurs argue that export-oriented crops like tea should be encouraged. According to the Department of Customs, Nepal exported tea worth Rs 4.59 billion, amounting to 15.59 million kilograms, in FY 2025/26. In the previous FY 2024/25, tea exports stood at Rs 3.62 billion.
Nepali tea, produced mainly in the hilly regions, enjoys strong demand in the international market. It is exported to India, the United States, Australia, China, the Czech Republic, Denmark, France, Germany, Italy, Japan, South Korea, Norway, the Philippines, Qatar, Saudi Arabia, Singapore, Switzerland, Thailand, the United Kingdom and other countries.
High global demand has encouraged farmers to take up tea cultivation. Nepal currently produces around 16.4 million kilograms of tea annually, grown across nearly 20,000 hectares of land. The tea sector provides employment to about 60,000 people. The Tea Board states that increased investment could further boost production, while the establishment of auction centers and laboratories is also necessary.
Organic tea produced in Nepal has gained international recognition for its quality. In 2079 BS, tea produced by the Tinjure Farmers’ Cooperative of Ilam won the “Grand Gold Medal” at an international tea quality competition organized by the China Tea Marketing Association.
Following such recognition, Nepali tea has gained greater visibility in the global market. Orthodox tea from Nepal is now exported under the trademark “Nepal Tea – Quality from the Himalayas.”
Commercial tea farming is concentrated in eastern districts such as Sankhuwasabha, Taplejung, Terhathum, Panchthar, Dhankuta, Ilam and Jhapa, and has recently expanded to Bagmati, Gandaki, Lumbini and Sudurpaschim provinces.
While CTC tea is mainly exported through India to international markets, orthodox tea is directly exported by Nepali producers. Orthodox tea is primarily grown in the hills. Since milk tea is more commonly consumed in Nepal, CTC tea dominates domestic consumption.
Nepal mainly cultivates three varieties of tea. Assam and Cambodian varieties are used for CTC tea production, while the Chinese variety is mainly used for orthodox tea. Nepali CTC tea is also known internationally for its strength, brightness and sharp flavor.
