Tea which is considered an ‘essential’ commodity across the globe and mainly in the Gulf nation broke all records in 2019 (January-December) to reach 53.45 million kg (mkg), with Iran replacing Russia as the largest buyer of Indian tea. Amid the global breakdown over COVID-19, various industries have been suffering huge loss due to the lockdown of export and import across the nations. But, the expert believes that the tea industry can survive this economic slowdown and can make steady growth.
How Tea Industry can survive this breakdown?
Iran, the largest buyer of Indian tea is devastated by the dual attack of the Covid-19 outbreak and a crude oil price war, which limits consumption potential.
Export activity has slowed down over the past two months. As per experts, there could be political upheaval in the Gulf nation sooner than later.
As per reports, India’s exports to Iran have risen 52 per cent, riding on the efficient implementation of a bilateral rupee-rial mechanism over the past two fiscals. It allowed receivables for exports to be adjusted against the payables for India’s huge crude imports ($13.5 billion in FY19).
On the other hand, India’s rice exports were the biggest gainer of the payment mechanism, posting 67 per cent year-on-year growth to $1.6 billion in FY19. This was followed by soya oil cakes ($210 million), organic chemicals and electric machinery, among others.
As per reports, India has stopped oil imports from Iran since May 2019 following fresh US sanctions. According to the Commerce Ministry, rice exports remained substantially lower in April-January 2019-20. On an annualized basis, India’s total exports to Iran are down 4.3 per cent this fiscal.
On the other hand, India has exported tea worth nearly $154 million to Iran in the financial year 2019. This fiscal, it reached $173 million in the first 10 months. Sources say the figures are likely to rise by the end of this month, as exports under the old contracts are on.
Sujit Patra, Secretary of the Indian Tea Association (ITA), is hopeful that India will end up exporting more teas to Iran in 2020. Moreover, he assumed that Tehran is rationing its total imports even in the worst-case scenario and expects tea to be the least affected as it is listed as an essential item in Iran.
As per reports, Iran requires an abundant supply of quality tea. The country consumes roughly 80 mkg of tea a year, of which 60-70 mkg is imported. The costlier orthodox variety is the most preferred, but they also consume some CTC (crush, tear, curl) tea.
