Tea exports from India likely to be down 8-10% during 2021

Tea export s from India are likely to be down by around 8-10 per cent during January-December 2021 as compared to same period last year. The drop in exports would be primarily due to high prices of Indian CTC (crushed, tear and curl) tea and the higher freight rates.

Data available on the website of Tea Board of India suggests that during the period from January-August 2021, the country's tea exports declined by around 12 per cent at 118.84 million kg (mkg), as compared with 134.47 mkg same period last year.

However, in value terms exports were up by nearly four per cent at ₹3,243.37 crore during January-August 2021 as compared with ₹3,104.04 crore same period last year. Unit price was up by 18 per cent at ₹272.92 a kg, as against ₹230.84 a kg last year.

Also read: Shortage of sea containers hits TN tea exports

It is to be noted that the country’s total exports in 2020 (January-December) had dropped by around 16 per cent to 207.58 mkg down from 248.29 mkg in 2019. The drop in exports was due to lower production, primarily orthodox variety, due to the lockdown and higher prices of Indian CTC. Value sale was however up by 8 per cent at ₹5,610.65 crore (₹5,159.46 crore) while unit prices was up by 10 per cent at ₹248.55 a kg (₹225.97 a kg).

According to Anshuman Kanoria, Chairman, Indian Tea Exporters' Association (ITEA), tea exports are down despite an increase in production of both CTC and orthodox tea this year over same period last year. Tea production was impacted in 2020 due to Covid-induced lockdown during the prime first and second flush season.

“Exports are likely to be down by 5-10 per cent this year and this is on expected lines. CTC prices are ruling higher and this is affecting exports. Moreover there has been a sharp increase in freight rates. This apart, the container shortage is impacting the business badly,” Kanoria told BusinessLine.

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 overall exports. The lower prices of Kenyan tea has also been offering a stiff competition to Indian CTC exports in some markets, which are price sensitive.

Exports to Iran hit

India's total exports to Iran during January-August 2021 was down by around 35 per cent at 15.47 mkg (23.87 mkg) due to the unresolved payment crisis with Iran. Exports to CIS countries declined by 18 per cent to 28.18 mkg (34.51 mkg).

Iran, which is one of the major markets for Indian orthodox tea, accounts for nearly 21 per cent of the country’s total exports.

Orthodox tea accounts for less than 10 per cent of the country's total production, which is estimated to be close to 1,300 mkg. However nearly 90 per cent of the 110 mkg of orthodox produced each year is exported. Exports to Iran have been impacted due to payment related issues.

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.

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