‘Rising production cost hampering India’s tea exports’

Tea sector has been facing higher cost of production due to increase in cost of inputs since last year

The Dollar Business Bureau

Increased supplies from countries like Sri Lanka, Kenya and Indonesia and rising input costs for Indian tea industry seem to be taking toll on India’s tea exports which have been witnessing a downfall for the past few months. In September this year, India’s tea exports reduced to $68.79 million, registering a fall of 11.72% as against $77.92 million recorded in the same month last year, the latest government data showed. In August 2015, the shipment of Indian tea saw a marginal growth of 3.57% year-on-year. According to Indian Tea Association (ITA), while the global tea production during Jan-August, 2015 was registered 1,288 Million Kg (MKg), India stood as a leading producer with 705 MKg yield. Though the country’s production was slightly lower than 717.62 MKg recorded a year ago, the output was much higher than other tea exporters such as Kenya (234.6 MKg) and Srilanka (224.5 MKg). However, India’s position as a top tea exporter was overtaken by Kenya which shipped 247.7 MKg till June. India exported 125.9 MKg tea during Jan-August period, which was lower than 129 MKg shipped during the corresponding period of last year. According to experts, fall in average export price and increased export from countries like Kenya, Sri Lanka and Indonesia have hampered the prospect of Indian tea exports in the international market. The average export price fell to Rs.183.40 per kg in Jan-Aug period of the current year from Rs.192.09 during the same period of the previous year. The tea industry has also blamed increased input cost in domestic production for the shortfall in exports. V Suresh Menon, chairman of Planters’ Association of Tamil Nadu (PAT) has recently expressed concern over the intense competition faced by the industry and asked the government to bring a separate policy to boost exports. “With competitiveness in the international market, there is an impact on prices. This trend prevailing in the world market particularly in the context of increasing cost of production is squeezing the margins of Indian producers and is threatening the viability of the industry,” Menon was quoted as saying in a report.  

October 19, 2015 | 5:31pm IST.   

The Dollar Business Bureau - Oct 19, 2015 12:00 IST