Irans import curbs hurt Indian tea sector

Written by Rohit Khanna | ROHIT KHANNA | Kolkata | Updated: Jan 4 2009, 04:08am hrs
Though 15 million kg (Mkg) may be a small amount when compared to Indias total tea export basket of 189 Mkgs, it becomes crucial in maintaining a proper mix in the export basket as well as balance in the domestic market.

As an eight-member delegation visits Iran, the decision to export 15 million kg of tea lies at the top of the agenda as around 70 million people residing mainly in central Iran, Tehran, Azerbaijan are avid tea drinkers.

With an almost 39% share, the total import value Indian export to Iran ranks second only to Sri Lanka with 58%. Iran imported the highest quality of Indian orthodox tea at average prices going as high as Rs 117.39 per kg during the January-August period in 2008.

This year the target is to export 15 Mkg of orthodox to Iran and if that does not happen it will be a major setback for Indian tea companies, said Sujit Patra, joint secretary, Indian Tea Association. According to Patra, Indian tea companies are finding it difficult to export to Iran as the country has been slow to withdraw tariff and non-tariff barriers. According to sources in the Tea Board of India, apart from whole leaf, tea gardens exported broken leaf and fanning to Iran. India has urged Iran to consider withdrawal of the barriers but so far the curbs are yet to be lifted, Patra said. If Iran does not withdraw barriers then tea gardens in India will start producing CTC which will create a shortfall in varieties like brokes and fannings. Moreover, excess CTC production will put pressure on the internal market and lead to oversupply which will push prices downward.

According to a Tea Board official, Iran has announced that all imports are to be registered by a local agent under the plant master file with a registration fee as high as $7,000. Apart from this, all shipping documents are to be checked by the Iranian embassy and companies are to bear high legalisation charges, adding to costs and delays. Once the consignment reaches Bandar Abbas, samples pass through tests that take almost 2 months.

The delegation will deliberate on these issues and try to sort out problems, said Patra.