Canada deal opens a door, but Darjeeling tea faces a compliance wall

The proposed India-Canada Comprehensive Economic Partnership Agreement (CEPA), coming at a time when the West Bengal tea industry is grappling with declining production and shrinking export markets, raises both hope and apprehension.

While the pact could open up greater access to the Canadian market, stringent pesticide-residue requirements in overseas markets could play spoilsport.

Declining exports of Darjeeling tea

The European Union’s increasingly stringent pesticide-residue requirements have already exposed gaps in India’s tea-testing infrastructure, said Bijoy Gopal Chakraborty of the Confederation of Indian Small Tea Growers Associations (CISTA).

“The challenge is whether the industry can meet the cost of compliance without adding to the financial burden on producers,” he added.

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For Darjeeling tea, the pressure is particularly acute, with overseas shipments declining almost by half over the past decade. Exports declined from 3.95 million kg in 2015 to 2.13 million kg in 2025, a fall of nearly 46 per cent, according to Tea Board of India data.

With production costs rising and competition from Nepalese tea intensifying, the industry has little room to absorb additional compliance expenses, according to industry sources.

The issue of pesticide residues

The EU, one of India’s important tea export destinations, has stepped up scrutiny of pesticide residues in tea, raising concerns over India’s ability to consistently meet its import standards.

Nicotine has been a particular point of contention. The EU reduced its temporary maximum residue limit (MRL) for nicotine in tea from 0.6 mg per kg to 0.5 mg per kg in 2023 and proposed a further reduction to 0.4 mg from February 2026.

Although the European Commission subsequently deferred the reduction until February 2030, retaining the 0.5 mg limit after monitoring data showed that the lower threshold was not widely achievable, highlighting the regulatory pressure Indian exporters are facing.

Concerns have also surfaced over Fenazaquin, a pesticide used to control mites in tea plantations.

Need for closer monitoring of pesticide use

In September 2026, the European Food Safety Authority (EFSA) flagged a discrepancy between India’s prescribed residue limit and the levels recorded in field trials under Indian agricultural practices, according to industry insiders familiar with the assessment.

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Residues reached 5 mg per kg in the trials, far exceeding India’s prescribed domestic maximum residue limit (MRL) of 3 mg per kg, exposing a gap between prescribed residue limits and actual pesticide-use practices in the field.

The findings underscored the need for closer monitoring of pesticide use and stronger residue-control mechanisms at the plantation level.

Consistency and cost efficiency

For exporters, however, the concern is not merely about meeting a particular residue limit but ensuring that pesticide application practices across plantations consistently produce tea that meets importing countries’ standards without substantially increasing costs.

Compliance can add to expenses at several stages, including monitoring pesticide use, maintaining records, conducting laboratory tests and ensuring traceability, industry sources added. Exporters may also have to meet buyer-specific testing and certification requirements, while smaller producers face additional costs in transporting samples to accredited laboratories, they further pointed out.

The Tea Board’s list of notified laboratories fixed the testing charge at Rs 9,000 plus GST per sample, highlighting the cost of repeated testing. The expense can be particularly high when tea from several growers is processed together, requiring individual batches to be separated and tested to establish traceability.

“Maintaining separate records for individual batches and arranging laboratory tests for each involved considerable expense and logistical difficulties,” Chakraborty said.

Need for more labs at reasonable rates

Access to accredited laboratories remains another constraint, particularly for smaller growers and exporters who have limited resources to absorb the cost of repeated testing.

According to the Tea Board’s list updated last month, 62 National Accreditation Board for Testing and Calibration Laboratories (NABL)-accredited laboratories are enlisted nationwide under its Integrated Assessment Scheme, including six in West Bengal. The accreditation of one among the six laboratories, however, had already expired, according to sources.

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The Parliamentary Standing Committee on Commerce had recently flagged delays of around 40 days in testing export consignments and called for an expansion of laboratory facilities.

Although the Tea Board has a Quality Control Laboratory at North Bengal Tea Park in Siliguri, the availability of testing infrastructure does not necessarily ensure timely and affordable access for growers across the region.

Small growers at a disadvantage

The problem has also exposed differences within the domestic supply chain. Small growers, who largely depend on bought-leaf factories—processing facilities that do not own their own tea gardens—to market their produce, face particular difficulties in arranging residue testing and obtaining compliance certificates.

Industry representatives fear that without more accessible testing facilities, stricter export requirements could further disadvantage smaller producers.

The financial pressures are also reflected in the industry’s demands for government intervention. The Indian Tea Association (ITA) has sought a minimum sustainable price to bridge the widening gap between production costs and market realisations.

MSP nod awaited

A 10-member Tea Board committee, constituted in July, recently recommended a benchmark for the proposed Minimum Sustainable Price (MSP) of tea, pegged at 30 per cent above the average 2025 auction price. The recommendation, submitted to the Centre, is awaiting the government’s approval.

While the industry has welcomed the recommendation as a step towards addressing the widening gap between production costs and market realisations, concerns remain over its implications for export competitiveness.

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Higher domestic price benchmarks could improve returns to tea gardens but may also push up procurement costs for exporters, making Indian tea less competitive in overseas markets.

Annual support package sought

Against this backdrop, the ITA has also sought greater government support to offset costs and improve export competitiveness.

Its August white paper proposed an annual support package of around Rs 113 crore for Darjeeling, covering working-capital interest, transportation, mechanisation, orthodox production and factory modernisation.

The association also urged the Centre to raise the export incentive provided under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme from the existing 1.4 per cent to 5-6 per cent for orthodox tea, offering exporters greater financial support to compete in overseas markets.

Although the Centre restored the earlier rates in March 2026 after cutting them by half, it made no further changes when extending the scheme in September.

The industry’s twin demands underline the difficulty of securing higher prices for producers while keeping exports competitive.

Turning opportunities into gains up to industry

The proposed Canada agreement may create opportunities for Darjeeling tea, but the extent of those gains will depend on what the deal offers beyond access to the Canadian market, said Chakraborty.

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Since tea already enters Canada duty-free under its main customs classifications, tariff concessions are unlikely to make a significant difference. Stronger protection for Darjeeling’s geographical identity and closer cooperation on regulatory standards could prove more valuable, according to industry insiders.

However, these opportunities will count for little unless the industry addresses its testing gaps, improves production efficiency, and makes compliance affordable for smaller growers.