Indian tea exports may be drastically affected due to an extended war between Russia and Ukraine or, for that matter, any spillover in hostilities to other regions, thereby also putting extra pressure on the already declining prices of the beverage.
Russia and the Commonwealth of Independent States (CIS) are India’s largest tea export destination and a vital market. The Indian tea industry has been stuck in a perfect storm for the past several years because of concerns such as uncompetitive prices, lack of quality crops, rising labour costs, and subdued export demand.
If the war goes on for a long time and more sanctions are imposed by Nato European countries, then it will be very difficult for the Indian economy, especially for the tea sector. If India loses this market, the price of tea will fall further as there is a surplus of tea in the domestic market.
India’s tea exports to CIS nations stood at 40.17 million kg, valued at around Rs 744 crore during the period January-November 2021, according to the Tea Board of India data.
Of this, exports to the Russian Federation stood at 30.89 million kg, estimated at Rs 558 crore, accounting for nearly 77 per cent of the total exports to the CIS. He said the total export to Ukraine during the period was 1.6 mkg (valued at around Rs. 30 crores), Kazakhstan’s was 6.25 mkg (Rs. 127 crores), while to other CIS nations it stood at 1.43 mkg (Rs. 29 crores), he said. Exports during the same period last year stood at 46.39 million kg, which was valued at around Rs. 823 crore. It is to be noted that the country’s tea exports during calendar year 2021 have been impacted dues to the lack of clarity over payment mechanisms with Iran and the higher prices of Indian CTC (crush-tear-curl) tea compared to its Kenya counterpart.