The India-EU Free Trade Agreement (FTA) marks a significant milestone in bilateral trade relations. For India's tea sector, especially Assam's premium orthodox producers, the deal brings long-awaited tariff clarity in one of the world's most valuable consumer markets. But even as tariffs fall to zero, a tougher regulatory test looms ahead.

Under the agreement, India secures preferential access to the European Union for over 99% of its exports by trade value. For tea, however, the breakthrough is not in bulk shipments. The structural shift lies in value-added segments.

Before the FTA, retail tea packs weighing less than 3kg were subject to duties ranging from 3.2% to 6.4%. Flavored and specialty green teas faced tariffs of up to 6%, while instant tea and extracts were taxed as high as 10.2%. All of these now fall to zero.

Assam itself produces over half of India's tea, around 628 million kilograms in 2024, with projections rising further. With India's total tea exports at approximately 262 million kilograms annually, even incremental EU gains can influence price realization for premium segments.

Issues Indian teas face are not duty barriers but MRL compliance. From March 2026, the EU's Maximum Residue Limits (MRLs) for certain pesticides, including thiamethoxam and clothianidin, tighten significantly, with default limits set at 0.05 ppm.

Source: STiR Coffee & Tea (Extracts), Courtesy: Tea Exporters' Association Sri Lanka