Indian tea exporters see headwinds in 2023

Indian tea exporters are seeking government support to boost exports in 2023 amid headwinds such as the conflict between Russia and Ukraine and the decline in demand from traditional markets like Europe and the Gulf countries. The exporters of the beverage consequently foresee a 10 per cent or more drop in shipments in the current fiscal after a growth of 18 per cent in 2022.

The tea industry is also apprehensive about the quantity they will be able to produce in the current fiscal due to the unfavourable weather conditions. In the January-March 2023 period, total exports were down by six per cent to 48.11 million kg. "The outlook for 2023 is not very optimistic. 2022 showed good growth largely due to the problems in Sri Lanka due to lower crop there. The Sri Lanka tea export has now recovered little and other headwinds are hitting the volume and value of Indian tea exports.

"With respect to the traditional markets, we continue to face some problems in Iran in terms of the registration of new contracts, which have been dragging on for more than six months," Indian Tea Exporters Association chairman Anshuman Kanoria said. Overall, the exporters may lose 10 per cent in tea exports and crossing the 200 million kilogram mark will be challenging, he said. Moreover, with cheap imports from Nepal the actual decline in Indian tea exports will be higher, Kanoria felt.

In 2022-23, the total export of the beverage was 228 million kg according to the Tea Board data. Bagaria Group chairman S S Bagaria said that tea exporters are keeping their fingers crossed with the unfolding of the geopolitical developments.  "While we may not be able to achieve the same level of growth as we did in 2022, maintaining the same figure would still be satisfactory for us. The crop is 20 per cent less this year in June and El Nino may make it worse," he said.

Bagaria stated that traditional markets like Russia, Iran and the US had recorded major growth last year, but due to the ongoing Russia-Ukraine war, demand has been affected. The exporters said they need support from the commerce ministry to boost exports.

Kanoria said, "We sent representations to the commerce ministry for promotional and infrastructure quality upgradation schemes. We interacted with the Tea Board and gave our suggestions as to what can be done to boost exports. Because the key objective is to boost demand, we need to focus on our promotional efforts in one or two key markets."

He said that there is good potential for market growth in China now. "However, there is hardly any funding available with the the Tea Board for promotional activity. "We are looking for promotional support from the Government of India and also some kind of handholding to develop packing infrastructure so that Indian tea can move from being mainly a bulk exporter to packed and made in India tea exports," Kanoria said.

The government has said that the export benefit scheme (RoTDEP) rate for tea exports has been increased to Rs 6.70 per kg from Rs 3.60 per kg based on Tea Board's recommendations to boost exports.