Tea Companies Fear Losing Lucrative Chinese Market Over Border Conflict

Just when Indian tea exports to China were on a rise, the trade is expected to take a beating on account of worsening Indo-China relations following intrusion issues in the border in Ladakh.

Over the past five years, China emerged as the third largest importer of Indian tea as demand for the black variety has been soaring there. In 2019, India had exported 13.45 million kg (mkg) of tea to China as against 10.31 mkg in 2018.

However, producers and exporters worry that worsening relations may affect trade.

“As ties between India and Pakistan soured, tea trade took a beating as well. It is a wait-and-watch situation for us now,” said Vivek Goenka, chairman, Indian Tea Association (ITA).

Planters in Assam said that despite the global Covid-19 situation, trade enquiries from China have been strong. However, they may dry up owing to the growing conflict.

“We have seen how trade dried up following the conflict with Pakistan conflict and fear the same this time,” a planter from Assam said.

However, exporters are of the view that even if the Indo-China trade is affected, Indian tea will find many other global takers.

“Production this year has suffered and there is high demand in the market for Indian tea. Even if the trade gets affected in one global market, there are others in the queue who are eagerly awaiting Indian tea,” an exporter from Kolkata said.

In north India, production in Assam and West Bengal has been estimated to have declined by 65 per cent during March-April and it is estimated that production would further decline by 50 per cent during May.

Atul Asthana, managing director at the Goodricke Group said while such scarcity will create huge demand and a price surge in the market, plantation firms and exporters will grapple to meet the global demand.

According to data sourced from the Tea Board, a total of 1.47 mkg of tea has been exported to China during January-February which made it the third largest global destination for Indian tea.

Moreover, owing to the pandemic, exporters and plantation firms are already finding it difficult to ship teas and a growing tension between these Asian powers may worsen the scenario on the logistics front as well.

Last year, India had pipped Sri Lanka to become the largest tea exporter to China as demand for Indian black tea, especially the Assam variety has been on a rise. Traditionally, the Chinese have been making and consuming green tea but sources said the demand for black teas among the youth has been on a rise.

ITA had also entered into a collaborative agreement with China Tea Marketing Association for promotion, sales and knowledge sharing. In September last year, Indian tea companies had also participated in a contest and exhibition in China. Among 850 samples, the Goodricke Group and James Warren Tea bagged the best and most robust quality awards respectively.