India’s Coffee Production Holds Steady Amidst Challenges
India is expected to maintain its coffee production at around 6 million 60-kilogram bags for the 2025/26 market year, despite facing difficulties from heavy monsoon rains. This estimate comes from the USDA Foreign Agricultural Service (FAS) based in New Delhi.
The coffee crop is anticipated to include about 1.35 million bags of arabica and 4.7 million bags of robusta, with total yield slightly lower than the previous season.
Export Predictions
FAS forecasts a decrease in total coffee exports by approximately 3%, moving just under 6 million bags. The high prices for green coffee have caused some European buyers to opt for shorter purchasing contracts, leading to more cautious buying habits.
Crop Yields Affected by Weather
The FAS report notes a projected 3% decline in arabica yields and a 2% drop in robusta yields due to the recent monsoon, which brought about 10% more rainfall in southern India, especially in Karnataka, the country’s main coffee-producing state. While the extra moisture has improved soil conditions, it has also led to issues like fungal diseases and fruit drop.
The USDA’s estimate of around 6 million bags is more conservative compared to the Coffee Board of India’s estimate of approximately 403,000 metric tons, or about 6.7 million bags. Both projections represent roughly 4% of global coffee production, with India ranking behind Brazil, Vietnam, Colombia, Indonesia, Ethiopia, and Uganda.
Competition from Brazil
For the 2025/26 year, total coffee exports are expected to be around 5.99 million bags, down from 6.21 million bags in the previous year. Green coffee makes up about two-thirds of these shipments, while instant coffee accounts for the remaining portion, with Italy, Germany, Russia, Belgium, and the United Arab Emirates being the primary buyers.
From October to August this year, shipments have already decreased by 11% as European roasters move from year-long contracts to shorter agreements, primarily purchasing based on immediate needs. This shift is largely attributed to rising prices.
A significant development occurred in November when the U.S. reduced tariffs on Brazilian coffee, which may increase competition in Europe where India sells most of its coffee.
Rising Domestic Consumption
Domestic coffee consumption is projected to grow to 1.36 million bags in 2025/26, up from 1.15 million the previous year. Soluble coffee is expected to dominate about 70% of the market. However, per capita consumption remains quite low at just 0.07 kilograms, compared to the global average of around 1.3 kilograms.
Changes in tax and labeling policies set to take effect on September 22, 2025, aim to boost domestic demand. The Goods and Services Tax on instant coffee and similar products will drop from 18% to 5%, aligning it with filter coffee rates. This reduction could lower retail prices by about 11-12%.
Coffee Prices and Stocks
In Karnataka, farm-gate prices have risen significantly, with arabica parchment prices climbing by around 58% year over year and robusta cherry prices increasing by 10%. This rise is attributed to a global supply shortage, especially from Brazil and Vietnam, paired with India’s premium-output coffee.
Ending stocks are projected to reach 165,000 bags in 2025/26, the highest in three years yet still considered tight historically. Coupled with new sustainability standards being developed by the Coffee Board of India, these factors suggest that India will continue to play a niche but important role in the global coffee market while also encouraging its own population to embrace coffee culture.
