Kolkata: As tea prices soar in India owing to lower output this year, packet tea players and tea traders are considering importing teas from Kenya and Vietnam, where tea prices have crashed due to overproduction.
The Federation of All India Tea Traders Association (FAITTA) said importing teas will be a one-time affair and that it will not push for imports in the coming years.
If the government gives the go-ahead, India will import tea for the domestic market for the first time. India has been importing teas only for re-export and that too at a small volume of 9-10 million kg annually.
However, the FAITTA’s demand has been strongly opposed by the planters and the Indian Tea Association (ITA). “We will move the commerce ministry with a request to stop the import of cheap teas if the traders try to do so,” said Vivek Goenka, chairman, ITA.
FAITTA chairman Viren Shah said, “Prices of tea in auctions have gone up significantly this year due to a shortage of supply. But we are not being able to pass on the price to our customers because the economic situation in the country is not conducive for increasing prices. The pandemic has created economic uncertainty everywhere.”
Shah said the federation will write to the commerce ministry this week for importing tea. “This will only be for this year and we will not press for importing tea in the coming years. We want to import 40-50 million kg of teas this year only,” he said.
At present, imported tea attracts 100% duty.
India consumes about 1,100 million kg of teas annually. Production in Assam and West Bengal fell 30% year-on-year to 370 million kg in January-July due to lockdown and heavy rains in Assam.
“After seven years, we are witnessing a surge in prices,” said CK Dhanuka, chairman, Dhunseri Tea. “All these years we have been languishing. But tea traders and packet tea players want to kill the industry and that is why they are pushing for import of tea for domestic usage.”
For tea traders, imports appear to be cheaper than domestic teas. Prices of CTC teas have increased nearly 48% year-on-year, hovering around Rs 305 per kg in the Kolkata auctions. On the other hand, in Kenya, where tea production has gone up 28.5% this year, prices of tea have fallen drastically. The average price of Kenyan tea in Mombasa auctions last week was $1.84 per kg, equivalent to about Rs 138 per kg. Even with 100% import duty, imported Kenyan tea will be cheaper. Vietnamese tea is even cheaper, costing about $1.5 per kg.
“After seven long years, prices have shown some northward movement even though the cost of production has gone up 50-60% in the same period,” said Goenka. “There are 10 lakh workers engaged in tea estates directly. Their livelihood will be at stake if the import is allowed. Also, the market will be flooded with cheap Vietnamese and Kenyan teas which will hurt the Indian tea producers.”