Struggling in the face of an acute supply constraint, the national and regional associations of tea traders announced in Mumbai on Thursday their decision to raise the prices of 'branded' tea by Rs 20 per kg, with effect from Friday.

Currently, lower quality of CTC tea is priced Rs 160 per kg; medium quality at Rs 180-190 per kg; and premium varieties at Rs 270 per kg.

Announcing the price-rise decision at a joint press conference, the tea marketing companies added that another Rs 20 per kg hike is likely in mid-June, in case tea supply at the auction centers does not show an improvement.

This year, the availability of tea through auctions fell more than 20 percent, from last year's 60-65 percent to 40-45 percent of India's total production, bringing about a hike in prices of branded tea.

Citing the reasons behind the proposed hikes in prices, Harendra Shah, President of FAITTA - Federation of All-India Tea Traders Association - mentioned lack of enough rains, and plucking of tea leaves at extremely low rates in tea gardens of the North and South India.

Shah said: "People should understand that the price hike will not add up to our profit as most tea companies are operating below their production cost in the last few months. Currently, tea is sold by the traders at a loss."