G.K Nair

Increased availability of imported tea is also a reason for drop in exports and auction prices.

Kochi , Sept. 5

SEVERE competition in the world market from the tea powers such as Kenya, Indonesia and Sri Lanka continues to depress the Indian tea exports in recent years without showing any signs of improvement.

Besides, import of cheap tea has also depressed the domestic market, according to Mr Anil Kumar Bhandari, President, UPASI.

"Subsequent to the collapse of the erstwhile USSR, our major market for CTC has been lost. Similar is the case with European Union and West Asia. The exclusivity has gone," he told Business Line.

On the other hand, there is a surplus in the market consequent to increase in production and imports.

Favourable weather conditions and "sophisticated farming technology have raised the production despite shutting down of a number of estates in Kerala", he pointed out.

Exports during January-June stood at 75.3 million kgs (mkg) valued at Rs 687.1 crore against 84.6 mkg worth Rs 721.2 crore during the same period in 2004.

Exports to CIS countries, including Russian Federation, Kazakhstan, Ukraine and Uzbekistan, have dropped to 15.77 mkg in January-May 2005 from 20.70 mkg in the same period last year, he said.

The industry has been thinking that the crisis in recent years has been the outcome of the "cyclical phenomenon of the economy". But now it is almost six years that factor could not be viewed as the reason, he said.

"The hard hit in the wake of globalisation are the commodities and the beneficiaries are the retailers," he claimed.

Given this scenario, the survival of the tea industry would be possible only through increasing consumption both in India and abroad, besides switching over to production of orthodox teas, which are in demand in the world market. Raising the demand needs popularisation of this beverage through aggressive marketing strategies.

"Private sector alone cannot undertake such promotional activities involving huge investments and hence the Government should step in to boost the marketing of tea," he said.

Attributing the drop in export volume and the auction price to increased availability of tea of foreign origin at low prices, Mr Bhandari said: "It is a matter of great concern for the tea sector in general and South Indian tea industry in particular".

The low import price is indeed a matter of concern especially in the context that significant quantum of tea imported into the country is meant for re-exports. Imports for re-exports have two implications - re-exporting substandard teas in the guise of Indian tea would tarnish the image of Indian teas in international market; and , it would result in additional pressure on supply position in the domestic market, as otherwise this tea could have been exported.

"It is in this context, UPASI has been advocating for fixing a minimum value-addition norm for re-exports," he said.

As Indian teas are well known in the international market for its quality attributes, the low quality tea producing countries might be taking advantage of duty free routes (import for re-export) to drain their surpluses, he pointed out.

Further, certain segments in trade may also be taking undue advantage of duty free routes to source the low priced teas and blend it with Indian teas for re-export as Indian tea.

According to UPASI, imports during January-April stood at 5.72 (mkg) as against 4.52 mkg in the corresponding period in 2004.

There had been a substantial increase in imports in 2004 with the country importing 30,522 tonnes valued at Rs 139.43 crore as against 9,859 tonnes worth Rs 57.51 crore in 2003.

Significantly, Vietnam has become the major source of supply with 17,279 tonne at Rs 32.56 a kg.

Other major suppliers were Kenya, Nepal, Indonesia and China.

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