Of the estimated 145 million kg of annual tea imports by Russia, 40 million kg is from India. Photo Credit: Reuters
The Indian tea industry is facing uncertainty following the outbreak of war between Russia and Ukraine.
MP Cherian, president of the United Planters Association of Southern India, said Russia is an important market for Indian tea. Of the estimated 145 million kg of annual tea imports by Russia, 40 million kg is from India. Of these, close to 45% are from South India, he said.
“We need to wait and see how the situation develops. 2021 sees a decline in tea exports. Against 189.8 million kgs fully exported between January and November 2020, it is expected to reach 175.3 million kgs in 2021. Ukraine is also a major importer of Indian tea. If tea exports to these two countries are affected, it will impact the Indian tea sector.
Deepak Shah, president of the South India Tea Exporters Association, said India exports about 40 million kg of tea to Russia and about 15 million kg to Ukraine every year. With the Russian invasion, exports to Ukraine are facing a problem, he said. Small businesses are unlikely to be affected by sanctions imposed on Russia by Western countries. Exports to Russia are of two types – one based on rupee payment and the other on dollar payment. He said that while there would be no problem in rupee payments, there could be problems in dollar payments.
“However, these are all business assumptions,” he said. Some foreign banks here have already said that they will not accept export documents to these two countries. If this trend spreads to other banks, tea exports will face challenges, he added.