Tea exports from India are likely to be up by nearly 30-33 million kg (mkg) during CY 22 at around 225-230 mkg, as compared with 196.54 mkg in 2021 backed by steady demand, particularly of orthodox teas and the economic crisis in Sri Lanka creating a market for Indian tea in some countries (earlier served by Sri Lanka).

Exports are up by nearly 16 per cent during January-September 2022 at 165.58 mkg valued at around ₹4543 crore, as against 142.55 mkg amounting close to ₹3904 crore same period last year. During the said period, orthodox exports were up by nearly 22 per cent at 79.94 mkg amounting to ₹2357 crore as compared with 65.51 mkg amounting to ₹1830 crore last year.

“We had estimated exports to be in the range of 225-230 mkg at the beginning of the year and based on current facts and figures, we are on course to achieving that,” Anshuman Kanoria, Chairman, Indian Tea Exporters Association told businessline.

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Lack of clarity on Iran situation

According to trade sources, exports could have been much higher had the geopolitical situation been better and the payment system with Iran been smoother. Rumours are rife that Iran has stopped issuing registration of proforma, which is a prerequisite for importing tea from India, due to some geopolitical reasons. However, the industry is still clueless about the actual situation on the ground.

“There is lack of clarity. Nobody knows what is happening but from what we understand, they (Iran) are not issuing registration of proforma and without that, exports cannot happen,” an exporter said on conditions of anonymity.     

It is to be noted that exports to Iran during the period January-September 2022 is marginally down at 18.64 mkg as against 18.76 mkg same period last year. In value terms, however, export to Iran is up by nearly 8 per cent at around ₹515 crore this year as against ₹479 crore last year.

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In 2020, Iran imported 26.18 million kilograms of tea from India, which was considerably lower than what it had done in 2020 at 33.75 million kg

Interestingly, there has been a huge surge in exports to UAE (nearly by 159 per cent) at close to 28.58 mkg during the said period this year as compared to only around 11.03 mkg last year. In value terms also, exports to UAE are up by nearly 217 per cent at around ₹871 crore (₹275 crore in Jan-Sep 2021) this year. Sources suggest that a significant chunk of tea to Iran is being routed through UAE using the third party currency mechanism permitted by Reserve Bank of India for doing business with Iran.

It is to be noted that ever since the US imposed sanctions on Iran, India could not engage in dollar-denominated trade with the country. Hence, a rupee-rial trade mechanism was put in place in 2018. Under this, oil refineries from India would deposit Indian rupees in the two designated banks – UCO Bank and IDBI Bank – for import of crude oil from Iran; the fund was used to clear dues of exporters from the country to Iran.

However, since there have been no oil imports by India since May 2019 due to US-led sanctions, the accumulations in the rupee-rial accounts have been depleting drastically. So dipping into that fund is no longer be an option.