With the Iran payments crisis unresolved, India?s production of orthodox tea is going to suffer a big blow this year. While prices of tea have come down by almost 15% in last six months, producers and exporters are apprehending losing out on one of the biggest orthodox destinations.India exported 11.5 million kg orthodox tea in 2009 lower than 15.8 million kg in 2008. Export of orthodox tea to Iran started increasing from 2006 and exports increased from 6.6 million kg to 13.1 million kg in 2007.
Till the second half of last year the operations were smooth. India pulled out of the Asian Clearing Union, a system it has long used to settle payments with Iran, owing to increasing US pressure. The RBI blocked normal transaction channels for trade with the West Asian nations. It said that transaction settlements between India and Iran would be done outside the Asian Clearing Union.
This resulted in a sharp climb down in tea exports to one of India?s most top orthodox buyers. Companies like Bhansali which exported around 4 million kg of orthodox tea to Iran last year, are yet to send a shipment to the country.Iran consumes around 80 million kg of tea annually, of which almost half comes via official import.
Exporters are afraid that if such a situation continues, India will eventually lose the Iranian market. ?Worse, this will result in a large drop in orthodox tea production next year,? said CS Bedi, chairman of Indian Tea Association.