Home ／ Insights on entering the Indian market
2026.03.24
Mornings in India begin with the comforting aroma of chai. The sight of a family member bringing chai to someone's bedside is a culture deeply rooted in the daily life of 1.4 billion people.
"Chai" is a word meaning "tea." The word "cha," which traveled overland from China, took root in India as "chai." In countries where it arrived by sea, it became "tea" - this is the historical background.
According to research by IMARC Group, India's tea market will reach approximately $11.86 billion (approximately JPY 1.78 trillion) in 2025 and is projected to grow to $15.44 billion by 2034 (a CAGR of about 2.98%). A Globe Newswire report also forecasts a market of $15.12 billion by 2030 (a CAGR of 4.34%). Under either forecast, India continues to grow steadily as one of the world's largest tea-consuming countries.
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Chai's widespread adoption in India traces back to the 19th century. Britain began growing tea in colonial India, and the finest leaves were exported to Britain. Indians, however, took the fine leaf fragments left over from processing and simmered them with milk and sugar, adding spices to create their own distinctive drink. This became the prototype of today's chai.
Tea leaves from the Assam region in particular have a strength and astringency that hold up well against milk, making them ideal for chai. The processing method known as CTC, which rolls the leaves into small granules, spread smaller, inexpensive tea leaves into ordinary households.
Chai is often described as a "mother's taste," much like miso soup in Japan. Every household blends spices such as cardamom, cinnamon, ginger, and pepper differently, giving each family its own distinctive flavor.
Chai is not a single thing; India has a wide variety of regional variations.
It uses green tea, and adding baking soda triggers a chemical reaction that turns it pink. Its salty-sweet flavor is layered with star anise and cardamom, and it is finished with a topping of pistachios and almonds.
This nutritious drink, made by adding butter churned from yak milk and salt, is suited to life at high altitude.
Bengaluru and Chennai In south Indian cities like these, while filter coffee culture remains deeply rooted, the popularity of chai cafés is also surging, especially among younger generations.
This regional diversity is a key point directly tied to Localization strategy decisions made when expanding a business.
India's chai-related business is undergoing major transformation as startups enter the space.
Founded in Bengaluru in 2010. Total funding raised is about $80 million (from Eight Roads Ventures, Saama Capital, and others). It operates more than 180 stores across 9 cities and has also installed brewing systems in more than 3,500 workplace communities. It has also been reported to be aiming for an IPO around mid-2026.
Founded in Delhi in 2012. Total funding raised is about $93.8 million (from Tiger Global Management, Elevation Capital, and others). Annual revenue for the fiscal year ending March 2025 reached about 330 crore (approximately JPY 6 billion). Its popularity comes from letting customers customize the spices and sweetness to their own taste.
The chai café franchise market is also growing 15-20% annually, and it is possible to enter with an investment of around 25-30 lakh (approximately JPY 3.8-4.6 million). Profit margins are said to run 35-45%, giving it strong profitability even within the food and beverage industry.
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A major characteristic of the Indian market is its "food diversity." Religions such as Hinduism, Islam, and Jainism each have their own dietary rules, and tastes and seasoning tendencies also vary greatly by region.
For example, offering products centered on chicken or vegetables, avoiding beef, is necessary. It is common to see the same brand offer region-specific menus, such as rice- and spice-heavy dishes in south India and wheat-based dishes in north India.
Global chains are also pursuing their own adaptation strategies in the Indian market: burger and pizza chains are actively introducing vegan and vegetarian options and incorporating local spices and ingredients. This kind of localization know-how is highly instructive for Japanese companies entering India.
According to a 2026 JETRO survey, 1,434 Japanese companies have entered India, and 77.7% of them are profitable. The IMF forecasts India's GDP growth for FY2025 at 6.5%, and the market's appeal keeps growing.
Japan's tea-processing technology and quality-control know-how offer significant added value to India's chai chains. Local partners Collaborating with them is key.
As India's middle-class grows, more consumers are placing importance on quality and the value of the experience. Japanese-style careful tea leaf selection and blending techniques can be a point of differentiation.
Tier 2 cities The regional cities below have seen slower entry by major chains, making them markets where first-mover advantage is easier to capture.
Zomato and Swiggy these and other online delivery platforms are an extremely good fit, making it possible to enter the market with reduced upfront investment.
Health consciousness is rising, and there is significant potential in developing new products such as matcha-blend chai and organic spice chai using Japanese matcha technology.
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India is one of the world's largest tea-consuming countries, and its tea market keeps expanding steadily. Chai is deeply rooted in daily life as a national beverage, giving the market an extremely solid foundation.
In Kashmir there is pink chai, made by adding baking soda to green tea to turn it pink, and in Tibet there is butter tea, made with yak butter and salt. In south India, chai cafés are gaining popularity alongside the region's filter coffee culture. This regional diversity is important to keep in mind when designing a localization strategy.
Chai Point, founded in Bengaluru, and Chaayos, founded in Delhi, have gained popularity by expanding their store networks and offering customizable service. The chai café franchise market also continues to grow.
Because every household blends spices such as cardamom, cinnamon, ginger, and pepper differently, giving each family its own distinctive flavor. Much like miso soup in Japan, it is positioned as a familiar drink deeply woven into daily life. This cultural familiarity is the foundation of the chai business.
Japan's tea-processing technology and quality-control know-how offer high added value to local chains and leave room for technology partnerships. As the middle class expands, more consumers are placing importance on quality and the value of the experience, and there is also potential in developing health-conscious products such as matcha-blend chai.
While the food and beverage industry can offer relatively high profit margins, location and operational structure determine success or failure. In Tier 2 and Tier 3 cities, where major chains have been slower to enter, you can also aim for first-mover advantage. Partnering with a local partner to nail down location and operations is key to success.
India's chai culture carries a social and cultural meaning that goes beyond simply a beverage preference. Woven into every moment of daily life, from the first cup in the morning to a break at work to time with family, chai serves as an important gateway to understanding the Indian market.
and the opportunities keep expanding: an $11.8 billion tea market, a chai café franchise market growing 15-20% annually, and Chai Point and Chaayos IPO developments at companies like these.
For Japanese companies, leveraging strengths such as quality-control technology and tea-processing know-how while understanding cultural differences and building a localization strategy on that basis will be the key to success. India Market As a first step into this market, we encourage you to consider the potential of the chai business.
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