May 28 2014 : The Economic Times (Delhi)
NEIGHBOURING NATION'S TASTE FOR KENYAN TEA HITS INDIAN EXPORTS India, Pak may need a Chai Pe Charcha
SUTANUKA GHOSAL
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KOLKATA
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Price is the key factor for Pakistan not buying first flush teas from India
Even as the bonhomie between Narendra Modi and Pakistan Prime Minister Nawaz Sharif continues, Indian tea faces stiff competition from Kenya in Pakistan. The neighbouring nation is buying more tea from Kenya in the current season and going by this trend it will be difficult for India to achieve 50 million kg of tea exports to Pakistan by 2015.Price is the key factor for Pakistan for not buying first flush teas from India.
This year, Kenyan production has been on the higher side and the African nation has offloaded tea in the Pakistan market at a much cheaper price. AN Singh, chairman, Indian Tea Association, said that Kenya has sold teas to Pakistan at a price of $2 per kg. “In some cases, Kenya has offloaded tea at the sub $2 level. On the contrary, our tea is at a higher price. There is a price differential and Pakistan cannot afford to buy tea at a higher price.“
Pakistan generally buys south Indian teas, which are comparatively cheaper than the Assam and Dooars teas. “The first flush teas from South India were fetching ` . 160 `. 165 per kg two months back. So Pakistan preferred Kenyan tea as prices were lower compared to Indian tea. Now prices of South Indian tea have dropped to ` . 130 `. 135 per kg. Pakistan buyers are slowly picking up some teas from India now,“ said Gopal Poddar, director of tea broking firm Limtex Group.
But as things stand today, Pakistan is unlikely to buy teas from Assam and Dooars, which are priced higher. “From July, second flush teas will come to the market. If the production is good then prices will fall in the Indian market. Let us see whether Pakistan buys teas from India at that level or not,“ said Singh.
Tea industry veterans feel that in 201415, Indian tea exports to Pakistan will not be more than 15-16 million kg. “If trade relations improve between India and Pakistan following the talks between Modi and Sharif, then chances are there that tea exports from India may increase. Otherwise at best India's exports to Pakistan will be around 30 million kg by 2015,“ Singh added. India's total exports in FY 2014 has been around 218.12 million kg.
Exports to Bangladesh, the other neighbouring nation of India, is also set to take a hit as the nation has increased import duty on tea from 5% to 15%. In FY14, India's exports had increased to 10.61 million kg from 2.98 million kg in FY13.
Even Iran is not showing much interest in Indian orthodox teas this year. The ITA chairman said: “Last year Iran was hungry for Indian first flush teas. But this year that trend is missing. However, still enquiries are coming from the Iranian market. We are hoping that exports of orthodox teas to Iran will improve from July onwards.“
This year, Kenyan production has been on the higher side and the African nation has offloaded tea in the Pakistan market at a much cheaper price. AN Singh, chairman, Indian Tea Association, said that Kenya has sold teas to Pakistan at a price of $2 per kg. “In some cases, Kenya has offloaded tea at the sub $2 level. On the contrary, our tea is at a higher price. There is a price differential and Pakistan cannot afford to buy tea at a higher price.“
Pakistan generally buys south Indian teas, which are comparatively cheaper than the Assam and Dooars teas. “The first flush teas from South India were fetching ` . 160 `. 165 per kg two months back. So Pakistan preferred Kenyan tea as prices were lower compared to Indian tea. Now prices of South Indian tea have dropped to ` . 130 `. 135 per kg. Pakistan buyers are slowly picking up some teas from India now,“ said Gopal Poddar, director of tea broking firm Limtex Group.
But as things stand today, Pakistan is unlikely to buy teas from Assam and Dooars, which are priced higher. “From July, second flush teas will come to the market. If the production is good then prices will fall in the Indian market. Let us see whether Pakistan buys teas from India at that level or not,“ said Singh.
Tea industry veterans feel that in 201415, Indian tea exports to Pakistan will not be more than 15-16 million kg. “If trade relations improve between India and Pakistan following the talks between Modi and Sharif, then chances are there that tea exports from India may increase. Otherwise at best India's exports to Pakistan will be around 30 million kg by 2015,“ Singh added. India's total exports in FY 2014 has been around 218.12 million kg.
Exports to Bangladesh, the other neighbouring nation of India, is also set to take a hit as the nation has increased import duty on tea from 5% to 15%. In FY14, India's exports had increased to 10.61 million kg from 2.98 million kg in FY13.
Even Iran is not showing much interest in Indian orthodox teas this year. The ITA chairman said: “Last year Iran was hungry for Indian first flush teas. But this year that trend is missing. However, still enquiries are coming from the Iranian market. We are hoping that exports of orthodox teas to Iran will improve from July onwards.“
