All the above mentioned variety of brews have geographical indication (GI) tags; a WTO agreement on trade-related aspects of intellectual property rights bars tea with GI tags to be blended with any other teas.
Higher imports of Kenyan Tea have started denting the quality of Assam orthodox, Nilgiri orthodox, Kangra and Darjeeling teas owing to a section of blenders’ illegal blending. This, the Tea Board of India (TBI) fears, would adversely affect the brand name of Indian tea in the global market.
All the above mentioned variety of brews have geographical indication (GI) tags; a WTO agreement on trade-related aspects of intellectual property rights bars tea with GI tags to be blended with any other teas. The TBI has issued circulars to tea stockists on reporting about the quantity and quality of imports made to the nearest TBI office from a stockist. But imports of cheap tea from Kenya have witnessed a 146% year-on-year jump and from Nepal, a 28% y-o-y spike, between January and August this year.
Although Kenya has witnessed a contraction in production during the six-month period in the calendar year 2021, their huge carry-over stock has led to higher exports. Kenya’s domestic auction prices continues to be low, though there has been a 5% correction in the first six months of the calendar year, an ICRA report said.
Earlier, Azam Monem, director, Mcleod Russel, told FE that cheap duty-free imports of Nepal tea was hurting domestic consumption. But the Tea Board’s concerns are also over the rising cheap imports from Kenya adversely impacting domestic prices and international sales as well.
Indian tea prices have started declining after June this year. While a tight supply situation escalates per-kg prices, lower volumes bring in the risk of overall low returns to the industry. There needs to be a balance between production and prices, Monem said.
According to an ICRA report, bulk tea producers have witnessed a rise in cost of production due to sharp rise in wages of tea garden workers and energy costs. The dual impact of declining prices and increasing costs would likely lead to a “moderation on a y-o-y basis, in the financial performance of north Indian bulk tea industry”. But the soft south Indian tea prices have also impacted the north Indian bought tea industry negatively.
South Indian tea prices were down 20% y-o-y in the first half of FY22 despite being quite similar to north Indian tea in quality. But the tea industry felt an opportunity of higher exports with soft South Indian tea prices for the first seven months of the current calendar year (CY) exports from India fell 14% y-o-y.