Date:23/05/2008 URL: http://www.thehindu.com/2008/05/23/stories/2008052360071400.htm

National

Indian tea companies to expand export profile

Atul Aneja

After the loss of Iraq, the firms are hoping to secure markets in Egypt, Iran and Pakistan

Indian companies keen to establish niche in Pakistan
Increase in demand for orthodox tea in Russia

CAIRO: Hit by the collapse of the Iraq market, Indian tea companies are making a concerted effort to expand their export profile in Egypt, Iran and Pakistan.

“Iraq used to source 40 million kg of its tea from India. But this market virtually collapsed in 2006,” the visiting Minister of State for Commerce and Power Jairam Ramesh said.

Jolted by the loss of Iraq, which absorbed 20 per cent of Indian exports, a fresh effort has been mounted to secure new markets in the region. Mr. Ramesh pointed out that Egypt, once a key consumer, is re-emerging as one of the most important markets. Almost wiped out of the market by Kenya and Sri Lanka, Indian tea has staged a comeback in Egypt recently.

Rise in exports

India exported five million kg of tea to Egypt in 2007, and exports are expected to hit the 10 million kg mark in 2008.

The rise is partly attributed to the changes in customs regulation in Egypt and the funnelling of Indian tea into the country’s public distribution system. Indian tea companies are hoping to achieve an export target of 20 million kg, amounting to nearly one third of Egypt’s total demand, in the near future.

Mr. Ramesh pointed out that in order to achieve this objective, the United Plantation Association of South India (UPASI) and the Tea Board will revive the Indian tea promotion centre in Cairo in the next three months.

India’s global exports hover around 165 million kg, with Russia, the single largest consumer of Indian tea, importing 34 million kg. The United Arab Emirates (UAE) and Britain are other major buyers.

Another major consumer is Iran, now targeted by Indian tea companies. Iran imports around 11 million kg, and India is well positioned to corner a sizeable chunk of this market.

Trade with Iran

However, trade with Iran has become problematic because many Iranian banks, involved in financing trade have been blacklisted by the United States. Indian companies wish to establish their niche in Pakistan, the second largest importer of tea in the world. Pakistan imports around 140 million kg, mainly from Kenya.

“Our target is to export anywhere between 40-50 million kg to Egypt, Iran and Pakistan,” Mr. Ramesh observed.

The Minister pointed out that the Indian companies would have to quickly adapt to the fast evolving taste preferences in major consuming nations, if they wish to retain their global profile.

“In Russia, increasing prosperity has raised the demand for the more expensive orthodox tea.

“But India so far has concentrated on the production of granulated tea or the Crush Tear Curl (CTC) varieties,” he said.

Subsidies

Realising this problem, India hopes to produce 120 million kg of orthodox tea, mainly in South India in the next few years.

“We have introduced subsidies to encourage the growth of orthodox tea,” Basudeb Banerjee, Chairman, Tea Board of India, said.

He added that in order to increase production, the Indian Institute of Technology, Kharagpur, has been involved in a project to install machines to process orthodox tea in some factories already dealing with CTC varieties.