Indian Tea Exports to Recover as Kenya Sets  Minimum Reserve Price

India's tea exports, which suffered greatly due to the availability of Kenyan tea at cheaper rates in global markets, may rebound now as the Kenyan government has set a minimum reserve price for tea to safeguard the interests of the country's tea growers. 

The Kenya Tea Development Agency has established a minimum reserve price of $2.43 (about Rs.183) per kg for processed tea at the Mombasa auction.

As a result, the price disparity between Indian and Kenyan teas has reduced, and Indian producers have begun getting black tea export inquiries from West Asia, Russia, Kazakhstan, and the United States. This year, Indian tea faces strong competition from Kenyan tea, whose prices ranged between Rs.250-300 per kg, while Kenyan tea was priced at less than Rs.150 per kg.

Exporters want to surpass the 200 million kg export milestone in 2021, riding on renewed worldwide demand in the next three months before the winter season brings an end to tea production.

"As exports to Iran have declined, producers have manufactured more CTC teas than orthodox teas this year. Iran imports indigenous teas. As a result, the supply of CTC teas has increased," said Azam Monem, director of McLeod Russel India NSE 2.36 percent. Due to Kenyan tea, we faced intense competition in worldwide markets." We are in a better position to increase our exports now that our prices are about Rs.250 per kg and Kenyan tea is around Rs.200 per kg.

According to Tea Board data, India exported 100.78 million kg of tea from January to July at an average price of Rs.271.38 per kg, up from 117.56 million kg the previous year. Last year, the average price per kilogram was Rs.224.21.

According to Sujit Patra, secretary of the Indian Tea Association, Kenya has taken advantage of the 'zero' tariff with Egypt and established a favourable quid pro trade deal (tea vs rice) with Pakistan, the second largest tea importer. These two nations account for more than 175 million kg of Kenyan tea imports.

Sri Lanka, another tea-producing country, has formed barter arrangements with Turkey, a tea-producing country with high import duties, and is now negotiating preferential trade deals with China and Bangladesh. India does not have any such benefit.

"Rather, India has granted Sri Lanka access to its market at a duty of only 7.5 percent, as opposed to the basic duty of 100 percent, with no quid pro arrangements. 

India has also reached an agreement with the ASEAN block to let tea into India at a basic tariff of 45 percent, which would be reduced further in the future," Patra added.