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Issue #588

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2014 Media Kit
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Indian tea exports to Iran show signs of resurgence

By: | at 08:00 PM | International Trade  

Indian tea exports are showing signs of resurgence with Iran being among countries showing interest in the beverage amid an aggressive promotion campaign launched by Indian tea industry captains to regain its place in the world market.

“There was a ban by Iran on import of teas in 2002 mainly due to accumulation of a large stock of their own teas. But now things are beginning to look up with more and more inquiries coming from Iran about our tea,” C.K. Dhanuka, chairman of the Indian Tea Association (ITA), told IRNA here.

“We hope to export some 10 million kilograms to Iran this year. Iran is a strong orthodox market and we must tap the market.” Iran produces about 50 million kilograms of tea annually, while its domestic consumption is pegged at about 95 million kilograms. “There is a big market in Iran and things are moving in the right direction.”

Meanwhile, overall Indian tea exports were showing signs of a revival after being in the dumps. “We hope to increase exports by about 20 million kilograms by the end of the current year,” Dhanuka said. Tea exports had plummeted from 200 million kilograms in 2002 to 180 million kilograms last year.

“The cooling down of things in Iraq and the improved relationship with Pakistan, coupled with the lifting of a ban by Iran on import of tea has brightened prospects of Indian tea exports to these countries,” the chairman said. “We hope to also penetrate the Russian market this time after a gap of some years.”

An Indian tea delegation visited Pakistan last month while another group is leaving for Russia soon to attract buyers. India is the world’s largest tea producer with the northeastern state of Assam accounting for about 55 percent of the total 856 million kilograms produced last year.

But Indian tea production is likely to drop this year with estimated production pegged at 850 million kilograms. “So far this year, the production figures are down by at least 30 million kilograms compared to the corresponding period last year. But we hope to make some losses by the end of the year,” the tea official said. India’s US$1.5 billion tea industry has been facing the worst crisis over the past century with prices dropping in weekly auctions, besides facing a slump in export figures and domestic consumption of the beverage.

“The crisis was largely due to a wide gap between supply and demand globally, besides cheap quality teas flooding the world market. There is a recessionary trend all over,” Dhanuka said. “The fall in tea prices and the high cost of production are reasons the Indian tea industry attributes to the passing of this crisis period.” “We want the central government to waive excise duties and bear 50 percent of the social cost in order to bring the industry back to the rails,” the ITA chairman said.

The slump in prices and exports has been largely attributed to the inferior quality of tea that is being produced in various Indian gardens.

“We don’t accept that India produces bad tea. In fact, our tea is much superior than many other countries. But we need to lower our prices in order to compete in the world market,” Dhanuka said. “Our topmost priority is to cut production cost by any means to regain our share globally.”

At the weekly auctions in Guwahati, the heart of India’s tea industry in Assam, prices of tea remained stagnant with marginal changes compared to the preceding week. The CTC variety of tea fetched Rs 79.36 (US$1.74 million) per kilogram. Similarly, prices of the Orthodox and Dust varieties of tea remained bullish in the auctions—a kilogram of Dust tea sold at Rs 72.48 while Orthodox tea fetched Rs 67.75. (Asia Pulse Pte, Ltd.)