Tea export volumes and earnings fall
Crisil expects the Indian tea industry to witness an 8% decline in revenue this fiscal year. During FY23, India’s tea exports stood at $817.54 million. “Domestic demand, which accounts for 82% of sales volume, should remain steady at 1,100 million kg this fiscal.
However, exports, which make up 18% by volume and about 30% by value, may slide about 12% on-year to about 200 million kg. Last fiscal, the export volume had increased 14% due to lower production in Sri Lanka, a major tea exporting country," Crisil said in a September report on the Indian tea industry. In the months ahead, increased supply of Sri Lankan tea will impact demand for Indian produce as their production is expected to rebound following better availability of fertilizers and pesticides, the report added.
Sri Lanka, which mainly produces orthodox tea, accounts for about 50% of the global trade in orthodox tea. India is also a major producer of orthodox tea—loose-leaf tea produced using traditional methods. Indian exporters have tried to capture newer markets after the Sri Lankan economic crisis, besides strengthening footprints in traditional tea markets like Iran, and Russia.
However, alternative payment mechanisms for trade with sanctions-hit Russia and Iran continue to be a challenge. A commerce ministry spokesperson didn’t respond to emailed queries. “An increase in domestic demand, amid a global slowdown, has led to tea producers selling more in the domestic markets," said Arpita Mukherjee, trade expert and Professor at the Indian Council for Research on International Economic Relations (ICRIER).
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