Indian tea exports may witness recovery as Kenyan government fixes minimum reserve price

India’s tea exports, which suffered heavily owing to availability of Kenyan tea at lower prices in the global markets, may witness a recovery as the Kenyan government has fixed a minimum reserve price for tea to protect the interest of tea producers in the country.

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

The sharp price difference between the Indian and Kenyan teas has therefore narrowed down and Indian producers have started receiving export enquiries from West Asia, Russia, Kazakhstan and the US for black tea. This year, Indian tea had faced a tough competition from Kenyan tea as its prices were Rs 250-300 per kg while Kenyan tea was priced at less than Rs 150 per kg.

Exporters are hoping to cross the 200 million kg export mark in 2021, riding on the fresh global demand in the next three months before tea production comes to a halt with the arrival of the winter season.

“This year, producers had made more CTC teas than orthodox teas as exports to Iran have come down. Iran imports orthodox teas. As a result, the supply of CTC teas has gone up,” Azam Monem, director,

McLeod Russel India

, told ET. “We were facing tough competition in the global markets due to Kenyan tea. Now that our prices are around Rs 250 per kg and Kenyan tea is around Rs 200 per kg, we are in a better position to improve our exports.”

According to the Tea Board data, India exported 100.78 million kg of teas in the January-July period at an average price of Rs 271.38 per kg, as compared to 117.56 million kg a year ago. The average price last year was Rs 224.21 per kg.

Sujit Patra, secretary, Indian Tea Association, said Kenya has taken advantage of the ‘zero’ duty with Egypt and made preferential quid pro trade agreement (tea vis-à-vis rice) with Pakistan, the second largest importer of tea. These two countries account for more than 175 million kg of tea imports from Kenya.

Sri Lanka, another tea producing nation, has made barter arrangements with Turkey, a tea producing country with high import duty, and is now negotiating with China and Bangladesh for preferential trade agreements. India does not have any such advantage.

“Rather, India has given access to its market to Sri Lanka at only 7.5% duty against the basic duty of 100% with no quid pro arrangements. India has also signed with ASEAN block to allow tea into India at a basic duty of 45% which will come down further in future,” said Patra.