India’s tea exports to Russia, the largest export destination for the commodity, are not likely to be impacted at this stage. The exporting community is not currently worried about the crisis in the CIS region as this is generally the lean period for export.
Moreover, with the US going to announce further sanctions on Russia, in addition to financial measures imposed this week, the impact on tea exports to the region may not be “material enough” if India establishes a bilateral payment mechanism as it did with Iran, major tea exporters and industry analysts observed. India has a strong bilateral relationship with Russia and, if required, developing a bilateral payment mechanism would not be difficult, they said.
“Russia is the largest importer of tea in the world. In the last few years, Russia’s import of teas has come down due to higher consumption of coffee, Covid pandemic and economic conditions. But Russia is our largest export destination and CIS countries are fond of Indian Tea. It is a very important market. Export to CIS countries starts from August-September. Negotiations generally start from April. So, we are currently not seeing any threat. Tea is such a beverage that the people, who consume it regularly, will have to consume the brew. So, we are not worried,” Sujit Patra, secretary, Indian Tea Association (ITA), told FE.
India exported 30.89 million kgs of tea to Russia between January and November in 2021. In 2020, the export was 33.85 million kgs. The Ukraine market comprises 17 million of tea, and India and Sri Lanka are the major exporters. Though in 2019, India exported 3.25 million kgs to the country, it came down to below 3 million kgs in 2020. As per Tea Board of India data during January-November 2021, India exported 1.6 million kgs. Commonwealth of Independent States (CIS) is a region which consumes orthodox and CTC tea.
“As there is demand for tea in Ukraine, it will have to buy teas from India, if not now, definitely later as Indian teas are available at various price points which the country will be able to afford. So, there is no point of worrying. We will not have any impact at this stage,” Patra added. These views also have been expressed by rating agency ICRA and some leading exporters.
“It is still very early days. This is a lean period for exports of tea. Let’s see how things like sanctions or restrictions on Russia pan out. If there is a bilateral payment mechanism established, the impact on tea exports to the region may not be material enough as was the case in Iran when sanctions were imposed in that country,” Kaushik Das, vice-president, ICRA, told FE.
