How Indian Coffee MSMEs Are Redefining Global Export Trends

As the global coffee market is demanding new flavours and tastes, India is swiftly emerging as a dark horse in the race for exclusive export dominance. Once overshadowed by Latin American giants like Brazil and Colombia, Indian coffee exports have carved out a distinctive identity, driven largely by small growers and MSME exporters. In a time of uncertain international supply chains and increasing appetite for sustainable, organic brews, India's coffee sector is writing a new chapter.

According to the Ministry of Commerce and Industry, in FY 2024-25, India exported coffee worth US$1.803 billion, pointing to an astounding 40.2% jump from the prior fiscal. This boom is not just about quantity. The value per tonne of coffee exported also saw a 22% increase, suggesting a significant shift towards upscaling. 

But what's the secret that's driving this remarkable shift? A binoculars view reveals how global markets are shifting, supportive dynamics, supportive government interventions, and the persistence of India's 250,000 coffee growers, 98% of whom are smallholders operating in the states of Kerala, Tamil Nadu, Andhra Pradesh, and the tribal belts of the Northeast.

India's Unique Coffee Profile

India is the seventh-largest coffee producer in the world that contributing 3.5% to global output, and is the fifth-largest exporter with a 5% share in the international market. Coffee cultivation under shade sets apart India from other coffee-producing countries in the global market. Often intercropped with spices like cardamom and pepper, which adds a unique aroma and flavour.

Among the varieties of coffee exported, robusta accounts for the lion's share, followed by arabica and value-added formats like instant and roasted coffee. The key importers include Italy, Germany, Belgium, and Russia, with emerging interest from East Asian countries and the Gulf.

MSMEs at the Core of India’s Coffee Success

Approximately 98% India's coffee finds its source from small and marginal farmers. These growers, many of whom own less than 10 acres of land, are the unsung heroes of India’s coffee success story. Through the support of cooperatives, Farmer Producer Organisations (FPOs), and government schemes, they have found their footing in international markets.

Consider Araku Valley in Andhra Pradesh, empowered by the Coffee Board of India and the Integrated Tribal Development Agency (ITDA), tribal cultivators in Araku Valley have witnessed a 20% growth in their harvests. Initiatives like these are not just improving income but are also helping preserve indigenous agricultural practices.

The Policy Push and Digital Acceleration

The Coffee Board of India has played a central role in boosting exports. Under the Integrated Coffee Development Project (ICDP), the Board supports small growers with better planting material, pest management, and post-harvest processing. In addition, government-led international campaigns have helped promote 13 regional and 3 speciality Indian coffee varieties.

The increase in adoption of technology has further pushed democratisation in access to the global market. Start-ups developed at the Atal Incubation Centre- Coffee Board Centre of Excellence in Bengaluru in Bengaluru are using 

blockchain to enhance traceability, while ONDC (Open Network for Digital Commerce) and other e-commerce platforms are empowering small brands to sell domestically and internationally.

Export Momentum: A Look at the Numbers

According to data from the Indian Brand Equity Foundation (IBEF), in FY 2024-25, India exported over 400,000 metric tonnes of coffee. The rise in global prices due to El Niño disruptions in Brazil and Vietnam offered a timely opportunity, which Indian growers were quick to seize.

While green coffee bean exports still lead the way, there's an increasing focus on value-added products. For example, instant coffee is gaining popularity in Southeast Asia and the Middle East, while high-quality roasted coffee is making inroads in North America and Japan.

Challenges Brewing on the Horizon

Beneath the surface of success, storm clouds still linger over the industry. Certification for organic and speciality coffee remains expensive for small farmers. Moreover, rising logistics costs—exacerbated by tensions in the Red Sea and Strait of Hormuz—threaten exporters, many of whom work with slim profit margins.

There’s also the balancing act between domestic and export demand. India's coffee consumption rose to 91,000 metric tonnes in 2023 from 84,000 in 2012. While this is modest compared to global averages, it signals a growing domestic market that must be catered to.

Unpredictability of climate conditions is another significant concern. Erratic rainfall and rising temperatures in traditional coffee zones like Kodagu and Wayanad are impacting yields and increasing pest attacks.

Future Outlook

Looking forward, the future of Indian coffee lies in value addition, sustainability, and branding. Thanks to Geographical Indication (GI) tags for varieties such as Coorg Arabica and Bababudangiris Arabica, Indian coffee has the potential to fetch premium prices globally.

To facilitate shared infrastructure and market access, FPOs and cooperatives need to be further incentivised. Similarly, simplifying certification procedures and offering subsidies for testing laboratories could play a crucial role in enabling MSMEs to ascend the value chain.

In terms of branding, initiatives like 'Make in India' or ‘One District, One Product’ (ODOP) could help coffee-producing districts earn global attention.