Covid-19, Competitors, and Conflict contribute to chai’s export dip

NEW DELHI: India, the fourth largest exporter of tea in the world witnessed a dip in the exports by 14.4% between January to July 2021.

The fall in Indian tea export is the result of various reasons. To begin with, when covid-19 pandemic hit the country, the production of tea was adversely affected and the demand for tea came down due to lockdown and restrictions imposed around the world. Consequently, there was an imbalance in trading of the good.

Next, the US sanctions on Iran also contributed to the decline in export of Indian tea. While Iran imported from India, 9.98 million kg of Indian tea leaf in the first 3 months of last year at a price of Rs.263 per kg, in the same 3 months of this year it imported only 4.7 million kg for a price of Rs.246.81 per kg.

Also, Pakistan – another major buyer of Indian orthodox tea, has stopped exporting tea from the country for the last 3 years due to cross-border terrorism and territorial disputes.

Besides sanctions on Iran and escalation in the dispute with the major destinations of tea, the low-price strategy of Kenya and Sri Lanka’s tea has given a fierce competition to India’s tea variety in the global market.

Kenya tea was auctioned at $1.90 in 2020, while in 2019 the average price was around $2.25, increasing the demand. Whereas the price of Indian tea is around Rs.215 per kg in the year 2020.

Besides, many players have come up with low-cost varieties of tea, giving India a tough competition. China, Indonesia, and Vietnam are among the top players in the international tea trade.

All these have significantly affected the trade of Indian tea.

On the other hand, USA and UAE recorded an increase in overall export of tea and the Commonwealth of Independent Nations remained the largest importer of tea in the world, even though a decline of 41 million kilograms was observed in the initial 7 months of this year.

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