Double Whammy for Tea Exports
Trade to two major markets for India – Iran and UK – may come down soon
Kolkata: Indian tea exporters are facing uncertainty from two of its major markets –– Iran and UK. The UK is flooded with cheaper grade tea from Kenya which is spoiling India’s chances there. Similarly, India is facing a problem in the payment mechanism with Iran as the country wants tea trade to be conducted in dollars instead of rupees.
Tea exports fell 5.19% in 2016 to 216.79 million kg. The unit price realisation in 2016 was the same as the previous year in dollar terms but higher by 4.8% when converted to rupee terms.
Binod Bansal, a leading tea exporter to Iran, said: “In the last one month, exporters are facing problem regarding payment mechanism with Iran, and tea already bought cannot be shipped out. Iranian importers said rupee trade is likely to come to a halt on March 31. US dollar can- not be traded due to sanctions.”
He said the central banks of the two countries should find a solution otherwise Sri Lankan tea would make major inroads into Iran. “We are yet to get any direction from the Reserve Bank of India,” Bansal said.
Iran had imported 22.75 million kg of premium Sri Lankan orthodox teas in 2016. “We are planning to send a delegation to Iran to sort out the issue sometime in April. For orthodox tea exports, we are also exploring the new market of Chile,” said Azam Monem, chairman, Indian Tea Association (ITA).
Traders are also worried about the UK market. “Exports to the UK post-Brexit may become a challenge given that the pound is becoming weaker while price of Indian tea is going up on account of the rise in cost of production. In 2016, Kenya, which produced 73 million kg of more teas, had sold more tea to the UK market compared to Indian tea. We have to wait till June to see whether importers from UK show interest in lifting teas,” said Anshuman Kanoria, chairman, Calcutta Tea Traders Association. In 2016, Indian exports to UK dropped by 20% to 15.78 million kg.
ANSHUMAN KANORIA Chairman, Calcutta Tea Traders Association Exports to the UK postBrexit may become a challenge given that the pound is becoming weaker while price of Indian tea is going up on account of the rise in cost of production