The Indian tea industry is facing uncertainty after war broke out between Russia and Ukraine.
United Planters Association of Southern India president M.P. Cherian said Russia was a significant market for Indian teas. Of the approximate volume of 145 million kg of annual tea imports by Russia, 40 million kg is from India. Close to 45% of these is from South India, he said.
“We need to wait and see how the situation evolves. Tea exports saw a decline in 2021. As against 189.8 million kg exported totally between January and November 2020, it was 175.3 million kg in 2021. Ukraine is also a major importer of Indian tea. If tea exports to these two countries are affected, it will have an impact on the Indian tea sector,” he said.
Dipak Shah, chairman of South India Tea Exporters Association, said India exports about 40 million kg of tea every year to Russia and close to 15 million kg to Ukraine. With the Russian invasion, exports to Ukraine are facing a problem, he said. The sanctions by western nations on Russia are not likely to affect small businesses. Exports to Russia are of two types - one based on rupee payments and the other on dollar payments. While there will be no issues with rupee payments, dollar payments may face problems, he said.
“However, these are all assumptions of the trade,” he said. Some foreign banks here have already said they would not accept export documents to these two countries. If the trend spreads to other banks, tea exports will face challenges, he said.