The Indian tea industry is in a danger of losing its much-coveted Russian market to countries like Sri Lanka, China and other South East Asian nations on account of cheaper exports from these countries.

With these countries supplying tea to Russia at a cheaper rate than India, the fate of the recently signed, 50 million tonne export deal with Russia hangs in limbo.

While India is offering tea at around $1 a kg, countries like China, Vietnam and Indonesia are supplying it at $0.60-0.70 a kg, a trader said and added that these lower prices had directly taken away India’s market in Russia.

The Russian tea market which witnessed a resurgence two years ago had been placing orders under the Rupee-Rouble Agreement.

But, it seems the market which imports around 100 million tonne of the commodity annually has suddenly turned cold. Though the first shipment of the deal was to be exported before end of April, the exporters feel otherwise.

Speaking to Business Standard, N Dharmaraj, chairman, tea committee of the United Planters Association of Southern India (UPASI) said, though there has been an inter-governmental agreement for the commodity, any actual offtake to Russia is yet to happen.

Dharmaraj added that these countries could afford to sell at a cheaper rate since their cost of production was low compared to India.

Russia and the former Soviet Union was traditionally an Indian market and the Indian tea exporters enjoyed certain privileges under the Rupee-Rouble Agreement. Recently, India had also lost a huge export order for Libya to Sri Lanka.

(21/02/2001)
Business Standard

India plans to maintain tea exports to Russia at 100,000 tons this year, or two-thirds of total demand in its largest market, said T.K. Chakraborty, head of India's Tea Board in Moscow.

"The general demand of the market will require around 100,000 tons in 2000, that's our indicative target for the year," he said.

That would be roughly the same as the 1998 figure of 103,000 tons and could be the same as in 1999, he said, although final data for last year were not yet in and there was some discrepancy between Russian and Indian trade figures.

"Russian customs figures show an import of 84,004 tons from January to September alone," he said, pointing out that this suggested the figure for the whole year could be 100,000 tons or more.

"But there was considerable apprehension that export from India has not been up to the previous year's level. There seems to be the likelihood of a considerable variation."

Chakraborty said the Indian tea trade followed the fiscal year starting in April, while the Russian customs year ran from January, so it might take some time to reconcile the numbers.

But he expected India to remain by far the dominant player in Russia's 150,000-ton-per-year market.

Russia was crucially important to India, whose second largest market, Britain, imported just 25,000 to 30,000 tons per year of Indian tea.

Customs data showed Indian tea imported to Russia from January to September 1999 was worth an average $1.91 per kilo, valuing imports in that period alone at $160 million, and valuing annual imports at $190 million if the 100,000 ton total proved right.

But economic turmoil in Russia following the August 1998 ruble devaluation left importers unable to pay as much as before the crisis hit, and Chakraborty said all sellers had been forced to cut their prices in response.

He said the average customs value of all teas imported into Russia fell to $1.78 per kilo in January to September 1999 from $2.16 in the same period in 1998.

By SEBASTIAN ALISON / Reuters

(14/02/2001) The Russian Journal

Close on the heels of Sri Lanka elbowing India out of the Libyan market, China has pipped India to the post in the race for the Russian tea orders, which was an exclusive territory of India till recently. With this, India's dream to add a new flavor to its tea exports stands shattered as Chinese along with a few other South East Asian producers are selling tea to Russians at a much lower price.

Top industry sources told The Financial Express that the Russian tea market, which showed a resurgence two years back by placing orders with India under the bilateral rupee-rouble agreement, has once again turned cold and the export to that country has virtually came to a grinding halt.

Sources said Russia had, early this year, sent enquiries for whopping 50 million tonne of tea, to be imported in two tranches under the rupee-rouble trade agreement. The first tranche is supposed to be exported by the south Indian industry before March. "But nothing has happened so far. We haven't heard from them since then," an industry insider said.

He said a major factor that turned the Russians cold to the Indian tea, in spite of being exported under the currency-pegged trade agreement, which incidentally weighs highly in favour of Russians, was the entry of Chinese and other South East Asian tea producers into the fray.

"While India is offering tea at around $1 a kg, China and a host of other South East Asian producers like Indonesia and Vietnam were offering tea at $0.60 per kg. This has virtually sealed our fate and closed the doors of Russian market towards India," he said.

Such offering at much lower prices smacks of dumping by these countries to deprive India of its traditional markets, he alleged. In many other cash crops including cashew and pepper, South East Asian countries, especially Vietnam and Indonesia are giving a run to India for her money by exporting commodities half the price quoted by India.

It may recalled that Russia (read erstwhile Soviet Union) was traditionally been a captive market for India and almost the entire tea exports to the tune of over 100 million kg per annum used to be exported to this country under the rupee-rouble agreement. Due to this over dependence on the Russian market, Indian tea industry, especially the south Indian tea sector, had virtually neglected other major tea markets like the Middle East and the Europe.

(14/02/2001)

A tea industry delegation will visit Pakistan, one of the biggest markets for tea, next month for talks on a free trade pact similar to the one Sri Lanka has with India.

"The main objective of the visit will be to discuss the proposals for a free trade agreement that is now coming through," a Government official said.

The talks will focus on how the Ceylon tea industry can get the best out of the proposed free trade deal in terms of access to the Pakistan market.

A bigger delegation is likely to visit Pakistan in April for the joint economic commission meeting that will cover the whole of the proposed free trade deal.

Both countries are trying to work out the plan for a bilateral trade pact on a 'fast track' basis.

13.02.2001 Daily News