Tea export volumes and earnings fall

New Delhi: India saw a slump in its tea shipments during April-October and export earnings also took a beating amid softer prices and challenges in traditional markets Russia and Iran.

According to official data from the commerce ministry, India exported tea worth $463.58 million between April and October, down from to $482.78 million in the year-ago period.

In terms of volume, India’s tea exports stood at 133.32 million kg during the January-August 2023 period, down 4.22% yearly, according to the data.

Competitor Sri Lanka exported 211.91 million kg of tea between January-October 2023, down 5.6% from the same period of the previous year. January-October figures for volumes are not available for India.

China is the world’s largest exporter of tea followed by Sri Lanka, Kenya and India.

Sri Lankan tea production was hurt due to the economic crisis in the country, which started in 2019 and intensified in 2022. However, the International Monetary Fund approved financial assistance to the island-nation. This along with aid from several countries, including India, has given impetus to revive its economy, including its tea industry.

Rating agency Crisil expects the Indian tea industry to witness an 8% decline in revenue this fiscal year.

During FY23, India’s tea exports stood at $817.54 million.

“Domestic demand, which accounts for 82% of sales volume, should remain steady at 1,100 million kg this fiscal. However, exports, which make up 18% by volume and about 30% by value, may slide about 12% on-year to about 200 million kg. Last fiscal, the export volume had increased 14% due to lower production in Sri Lanka, a major tea exporting country,” Crisil said in a September report on the Indian tea industry.

In the months ahead, increased supply of Sri Lankan tea will impact demand for Indian produce as their production is expected to rebound following better availability of fertilizers and pesticides, the report added.

Sri Lanka, which mainly produces orthodox tea, accounts for about 50% of the global trade in orthodox tea. India is also a major producer of orthodox tea—loose-leaf tea produced using traditional methods.

Indian exporters have tried to capture newer markets after the Sri Lankan economic crisis, besides strengthening footprints in traditional tea markets like Iran, and Russia. However, alternative payment mechanisms for trade with sanctions-hit Russia and Iran continue to be a challenge.

A commerce ministry spokesperson didn’t respond to emailed queries.

“An increase in domestic demand, amid a global slowdown, has led to tea producers selling more in the domestic markets,” said Arpita Mukherjee, trade expert and Professor at the Indian Council for Research on International Economic Relations (ICRIER).

“The flooding of Chinese green and white tea in the market is also impacting the sale of orthodox tea,” she added.

“The trends in tea consumption are also going through a major change. Consumption patterns are changing with the increasing popularity of different types of tea like green tea, white tea, ginger tea, tulsi tea, etc., some of which have large components of other commodities,” Mukherjee said.