Commodities

Tea imports up 139% during Jan-March; UPASI voices concern

V.Sajeev Kumar Kochi | Updated on July 05, 2021

Beverage exports hit on higher freight costs

Tea imports have risen 139 per cent to 5.96 million kgs during the January-March period this year, over the same period last year. As imports surge in the first quarter of this calendar year, the United Planters Association of South India (UPASI), the apex trade body, has voiced concern stating that rising inflows were detrimental to the domestic tea sector.

Interestingly, even as tea imports surged, the exports from the country have taken a hit. Higher domestic prices triggered by supply issues could be a reason for the rise in imports, while other issues such as higher freight costs also resulted in lower exports.

Prashant Bhansali, President, Upasi, said that tea imports during 2020 was estimated at 23.40 million kg as against 15.85 million kg in the previous year, an increase of 47.63 per cent. Imports of increased quantities are reported from Kenya, Nepal and Vietnam, he said.

However, the data relating to the break-up of imports for re-exports of tea was not available. The domestic tea sector has been witnessing an increasing cost of production due to high input cost and high wage cost and any higher intake of teas through import will have a telling effect on the sector, which caters to a large segment of the population residing in the remote areas.

According to UPASI, the plantation commodities, including tea, were exposed to international competition since April 2001, when the quantitative restrictions were lifted as per the commitments under WTO. The signing of the ASEAN Agreement in 2009 had further opened up the Indian tea market to plantation producing countries like Indonesia and Vietnam. 

Under the ASEAN Agreement, the import duties were gradually reduced since 2009 for tea and the current import tariff for ASEAN countries, viz., Indonesia and Vietnam is 45 per cent. Import of tea from Nepal under SAFTA is nil duty.

Imports of Tea in India

Imports in M.Kgs

% Change

+/-

M.Kgs

2019

15.85

2020

23.40

+ 47.63

7.55

Jan-Mar -2020

2.49

Jan-Mar -2021

5.96

+139.36

3.47

Exports of Tea from India

Exports in M.Kgs

% Change

+/-

M.Kgs

2019

252.15

2020

209.72

[-] 16.83

[-] 42.43

Jan-Apr -2020

61.13

Jan-Apr -2021

57.97

[-] 5.17

[-] 3.16

Upasi suggested the Government to closely monitor tea imports and also implement provisions of Tea Distribution & Export Control Order 2005, wherever necessary.

On the other hand, tea exports had taken a hit as evident from the decline in the quantity exported and the value realised. For instance, tea export was lower by 42.43 million kgs in 2020 and the declining trend continued during the first four months of 2021. Though there was some recovery expected on the export front, the shortage of containers, especially food grade containers and increased freight charges had turned out to be an obstacle for plantation exports including tea from India. This has resulted in an increase in the transaction time and cost leading to a considerable delay in completing the export formalities. This could damage the green shoots of recovery seen on the export front, Upasi said.

In the midst of these disadvantages, the non-payment of MEIS from April 1, 2020 and dis-continuation of the scheme itself from December 31, 2020 without any new incentive scheme in place had added further difficulty to the existing distressed situation, Bhansali added. 

(ends)

Published on July 05, 2021

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