Kochi: A 13-member tea trade delegation, led by Tea Board chairman Basudeb Banerjee, has left for Pakistan, a 170-million kg tea market. The team plans to explore the possibilities of expanding tea trade, including opening a land route at the Wagah border between Amritsar and Lahore. Traditionally, India has been using the Karachi port for tea exports, but it takes a long time for consignments to reach Karachi via Dubai or Colombo.
According to Banerjee, the government has been also looking at opening the Wagah border for tea trade. However, a section in the Pakistani tea industry feels opening up the land route at the Wagah border might not prove beneficial since the tea would reach Lahore which is not a tea trade centre.
“The port city of Karachi is the hub for the tea trade,” says Moshin Saify of a leading Pakistani tea firm, Tapal Tea. “All tea from abroad lands there. What India needs to look at is a direct ferry service to Karachi,” he adds.
Indian tea exports to Pakistan rose to 14.9 million kg in 2006 from 11.5 million kg the previous year. This was because a severe drought in Kenya, Pakistan’s main supplier, forced the latter to look to India. Now that the situation in Kenya has changed and tea production is reported to be normal this year, retaining the Pakistani market is the biggest challenge for the Indian tea industry, says Banerjee.
Pakistan, which imports around 135 million kg of tea, has been sourcing nearly 70% of its total requirement from Kenya. But the drought, sources in the Pakistan tea trade say, has made it realize that the country should not depend on a single source to meet its demand. Incidentally, till 1984, Pakistan had depended solely on Sri Lanka for its imports and shifted focus to Kenya when Sri Lanka raised prices.
According to Saify, who was in India recently, the quality of Indian tea, especially the south Indian variety, has improved substantially and will suit Pakistani needs.
However, pricing will hold the key as better quality material is available from Kenya and at a reasonable price, he says. Saify, however, declines to divulge the price differential. Pakistan is a lower-end CTC (crush, tear, curl) market and has been looking at south India as a major source. Tea from here will be blended with that from Kenya.
At a time when India has been looking at new markets, especially Egypt where it hopes to raise exports from the present 2.7 million kg to 25 million kg in the next few years, the real test for the Indian tea industry is ensuring that Pakistan takes advantage of its physical proximity to India.
This year exports to Egypt will touch about six million kg. Overall, India exported 208.3 million kg last year.
Since India has been making efforts to sustain the Pakistani market, a section of the exporters feel the government should come up with a special “Pakistan package” on the lines of the subsidy offered for pepper exports through the Spices Board.
“The Centre can devise a similar subsidy package that is in accordance with the World Trade Organization norms,” says an exporter, who did not wish to be identified.
A freight subsidy of Rs5 per kg and Rs2 for internal transport was offered on pepper export between 2005 and 2007 and following this, the quantum of exports nearly doubled to 24,000 tonnes last year. “Subsidy for a limited period can be considered for tea export to Pakistan for making Indian exports price-competitive and help stabilize the market,” exporters say.