Gulf turmoil hit Indian tea exports

Political turmoil in the Middle East and confusion over the mode of payment for imports by Iran have taken a toll on India's tea exports, which have fallen by over 14 million kg during January-August 2011 compared to the year ago period.

According to recent data from the Tea Board of India, the country's tea exports have plummeted to 109.24 million kg (estimated) during January-August from 124.15 million kg (estimated) during the same period the previous year.

Experts said the trigger for the decline in total tea export is the Iran payment crisis and political turmoil in Middle East and North African countries like Libya, Syria and Egypt.

"The main reason for the decline in tea export is the Iran payment crisis. Tea export to Iran is being held up because certain payments are held up. And also now export to Iran cannot happen directly," Kamal Baheti, director of world's largest tea producer McLeod Russel, told IANS.

Iran is a major consumer of the high quality orthodox tea from India and imports nearly 15 million kg every year.

Indian Tea Association (ITA) secretary general Manojit Dasgupta said between January and August, tea exports to Iran were down by four million kg compared to the like period the previous year.

The problem over Iran payment arose after the Reserve Bank of India (RBI) last December scrapped the Asian Clearing Union (ACU) currency swap system to pay to the country following pressure from the US, which is using sanctions to force Tehran to halt its nuclear programme.

Baheti said tea exports are likely to be down by 10 million kg this calendar year as against last year.

A leading Indian tea producer and exporter Goodricke said the political turmoil in many of the Middle East countries and Egypt too had contributed to the decline in  exports.

"Middle East countries are major importers of India tea. But the amount of export to the region is down this year due to political turmoil in countries like Libya and Syria. Export to Egypt has also declined," Goodricke Group managing director and chief executive Arun N. Singh said.

The fall of Tunisian president Zine el-Abidine Ben Ali in January was followed by anti-government protests in Egypt, Libya, Yemen, Syria and Bahrain.

There has also been a significant drop in Indian tea exports to the Commonwealth of Independent States (CIS), mainly Russia, due to higher prices compared to Sri Lankan tea, he said.

However, export of Darjeeling tea, known the world over for its aroma and taste, has soared.

"Darjeeling tea exports have increased by about eight-ten percent during January-August compared to the year ago period. The export hike is not because of additional demand...but because production is up by 15 percent during this period compared to the like period last year," Darjeeling Tea Association secretary Kaushik Basu said.

India generally exports about six million kg of Darjeeling tea annually, mainly to Europe.

Basu said economic slowdown in the Eurozone has so far not affected Darjeeling tea export. "However, if the recession remains strong in Europe even after six months, I think exports of Darjeeling tea will be affected," he cautioned.

But there is some good news for exporters of Darjeeling tea, with the European Union registering the product as a Protected Geographical Indication (PGI), which aims to protect product names from misuse and imitation.

"Any such tag is very prestigious. It will help exporters of authentic Darjeeling tea. It will stop mixing and fake tea exports," Basu said.