Tea exports to Pakistan decline 50% till August

Shipment to Iran has more than doubled in the year to date

The ongoing tension between India and Pakistan, as well as uncertainty over payments as a result of the strained relation, has resulted in Indian tea exports to Pakistan falling by over 50 per cent to only 3.14 million kg (mkg) till August this year. Surprisingly, exports to Iran have more than doubled during the same period, which was looking uncertain given the sanctions by the US in dealing with Iran.

Incidentally, Pakistan, in terms of value, is the biggest tea importing country in the world after Russia. People in the know suggested Pakistani tea imports are pegged at $560 million while Russian imports are estimated to be around $490 million.

Data sourced from the Tea Board shows that in the first eight months of the current calendar year, India exported 3.14 mkg of tea valued at $4.80 million while in the similar timeframe of 2018, India had shipped 6.17 mkg of tea to its neighbour, valued at $9.02 million.

The fall, say exporters, is because of t he fact t hat no exporter wants to be singled out as an exporter to Pakistan, especially when border skirmishes and Pakistan’s assertion on the Kashmir issue has been rising.

“Pakistani buyers usually don’t falter on payments and trade used to be as usual. It, however, changed after the Pulwama attack when exports were hit. Now, the situation has become tense and we are unsure if payments will come at all if we send a consignment,” an exporter to Pakistan said.

Usually, budget teas from south India are sold to Pakistani buyers. Sources among exporters said that at times when India-pakistan relations usually hit a low, the tea is increasingly routed through other countries to steer off any trade crisis.

Primarily, Dubai is the hub of such re-routing of tea followed by

Kazakhstan, Egypt and other countries. “This time, however, such re-routing of tea is also not happening”, a source among the exporters said.

Asked about ongoing exports to Pakistan, a tea producer said, “Some of the planters have a contract with Pakistani buyers and this contract was signed even before the season. The tea, which is being shipped to Pakistan, is the volume which is primarily contracted for.”

Exports to Iran increased to 23.4 mkg or up 120 per cent during the first eight months of 2019.