THARIAN GEORGE K * Historical Roots of the Crisis in the South Indian Tea Industry ALTHOUGH TEA has a very long history, tea plantations were introduced in South India on a commercial scale around the late 1840's. The tea industry in India was established and developed exclusively with British capital and enterprise. The tea plantations in India represented for British capital one of the most profitable spheres of investment. Tea was primarily an export industry when it was introduced yi South India. It is the most important plantation industry in the country employing nearly one million workers and earning over Rs 400 crores p^r year in foreign exchange and contributing a substantial amount as tax revenue to the Central and State governments, Today, almost all the groups associated with tea production in India arc broadly in agreement with the fact that the industry is going. through a period of crisis.^ The increases in production costs which-have occurred over the last 30 years in the face of stagnant prices, strikingly altered the conditions of viability of tea gardens in South India. Kerala is one of the worst hit lea growing regions in the 'country where, according to a recent estimate by the United Planters' Association of South India, the cost of production of a^ sample tea estate, whose average yield is about 30 per cent higher than the state average, has gone up by about Rs 2.69 from Rs 11.32 per kg in 1979-80 to Rs 14.01 per kg in 1980-81. fy-t the same time, the average price realisation of Kerala teas at Cochin auctions was about Rs 12.23 per kg during the same period. On these calculations, the idustry is apparently losing on an average about Rs 1.78 on every kilogram of tea produced in the state. This paper is mainly concerned with the analysis of the main factors behind *the crisis affecting the Indian^tea industry in general and the South Indian tea induitry in particular. Proximate Causes of Cost Escalation There has been an all-round escalation in the cost of production on account of increases in wages, hikes in the prices of fertilizers, coal, *Centre for Development Studies, Trivandrum.