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Tea exports from India are likely to be lower by around 12-13 per cent at close to 180 million kg (mkg) during the calendar year 2021, as against 207.58 mkg in 2020.
It is to be noted that tea exports had already witnessed a decline of around 18 per cent during January-December 2020 as compared to the year-ago period. The drop in exports in FY-21 was mainly due to lower production, primarily of the orthodox variety due to the lockdown induced by the Covid-19 pandemic; and higher prices of the Indian CTC tea.
According to Anshuman Kanoria, Chairman, Indian Tea Exporters’ Association (ITEA), the lack of clarity overpayment mechanism with Iran and the higher prices of Indian CTC (crush-tear-curl) tea as compared to the African counterpart are some of the key reasons for the lower exports.
While exports have come down on a year-on-year basis, imports have increased, affecting the industry.
“We had predicted that exports are likely to be well below 200 mkg around six months back. Though the official data is yet to be out but we expect exports to be in the range of around 180 mkg,” Kanoria told BusinessLine .
Data available on the website of Tea Board of India suggest a nine per cent decline in exports at 157.20 mkg during January-October 2021, as against 172.19 mkg same period last year. The unit price was however up by nearly 11 per cent at ₹270.52 a kg during January-October 2021 as against Rs 243.12 a kg same period last year.
The total value of exports was up by around two per cent at Rs 4252.55 crore during the said period as against Rs 4186.23 a kg last year.
Orthodox exports hit
It is to be noted that Iran is one of the major markets for Indian orthodox tea, accounting for nearly 21 per cent of the country’s total tea exports.
Orthodox tea accounts for less than 10 per cent of the country’s annual tea production, which is close to 1300 mkg. However, nearly 90 per cent of the 110 mkg of orthodox produced each year is exported. Production of orthodox tea in FY-21 was lower by around 50 per cent, thereby affecting exports. This apart, exports to Iran were impacted due to payment-related issues.
Tea export to Iran is down by nearly 28 per cent at 21 mkg during Jan-Oct 2021 as against 29.16 mkg same period last year.
CTC accounts for nearly 60 per cent of the country’s total tea exports at around 150 mkg. So any impact in demand for CTC affects the overall exports. The lower price of Kenyan tea impacts exports of Indian CTC to some markets, which are more price sensitive, industry experts pointed out.
The higher freight rates have also been impacting exports badly.
“We were expecting freight rates to stabilise this year but once again they have started increasing,” Kanoria said.
According to Vivek Goenka, Chairman, Indian Tea Association, the industry had, in a recent meeting with Commerce and Industry Ministry, Piyush Goyal, highlighted the key issues with exports.
“There is a need to promote orthodox exports and for that to happen the government should incentivise production of orthodox tea. We are also working on increasing exports to some markets like Iraq where we had a reasonable presence but where sales have been dwindling recently,” Goenka said.
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