India’s tea sector has been faced with serious challenges followed by internal and external developments during the last two decades or so. The depressionary trend in various respects of tea sector has been marked in Assam, which has global reputation in terms of output generation and spread of tea cultivation. It was expected that the period of India’s economic liberalization would revive the Assam tea sector. But the reality has been different. There has been a gradual shift in most of the macro variables of tea sector of Assam in particular and India in general, but such changes were only due to trend variable but not due to productivity improvement of land and labor in the state. At the backdrop of this scenario, this paper endeavors to analyze some of the internal factors influencing the production of tea in Assam during the period of economic liberalization. The outcome of the present study reveals that the productivity of land and labor has not significantly improved in the whole period under investigation. Even India’s liberalization period has been unable to influence tea productivity in the state significantly. The trend is also expected to continue in the near future, unless suitable method of cultivation, which ensures higher productivity of either land or labor, is undertaken. A comparative analysis of the performance of tea sector of Assam during pre-liberalization and liberalization periods revealed that there was a structural break after initiation of economic liberalization. Judging from the lower compound annual growth rates during liberalization period compared with pre-liberalization growth rate, the study concludes that India’s liberalization period has been less successful in reviving the Assam tea sector.

For the past century, a substantial part of global trade has been shared by tropical plantation crops (tea, coffee and rubber). To the cultivating nations, they have meant employment, foreign exchange, widespread use of unproductive land, industrial raw materials, export, etc. Due to global preference, mass consumption tea is ranked prominently amongst other plantation crops (Mitra, 1991).

Tea sector is one of the oldest organized agro-based plantation sector in the country. Tea production involves both agricultural and manufacturing stages. India is the second largest producer (25%) of world production, largest consumer (13%) of the world trade and fourth largest exporter of tea (20%) of domestic production. About 80% of the world’s total tea is produced by six countries, viz., India, China, Kenya, Sri Lanka, Turkey and Indonesia, together (Kumar et al., 2008). Discovery of indigenous tea plants growing wild in Assam in 1823 and the end of British monopoly of tea trade with China in 1833 resulted in the expansion of tea industry in the country. Apart from earning valuable foreign exchange, the tea sector directly employs one million people and another two million indirectly. Although tea export earning has decreased, yet India maintains a major stake in tea as a net substantial foreign exchange earner for India.

Assam tea sector has occupies a position globally and nationally for spread of cultivation and output generation. Tea is one of the most important cash crops as well as a source of employment and revenue for the economy of Assam. Out of all-India acreage, Assam covers 51% of the total land devoted for tea cultivation in India (Kar, 2009). Tea sector of Assam is the mainstay of the state’s economy, with a turnover of 2,030 cr annually. Assam tea sector has provided livelihood to over 6 lakh persons directly and 18 lakh persons indirectly. There are more than 800 commercial tea estates in Assam (Gogoi, 2007) with an area of 232,079 ha of land under tea cultivation yielding 432,430 tons of tea (Kar, 2009).

Agricultural Economics Journal, Rubber Production, Nontraditional Areas, Capital Investment, Government Agencies, Community Processing Centers, Rubber Plantation, Government Forest Lands, Goalpara District, Economic Empowerment.