Tea companies fear losing lucrative Chinese market over border conflict

Over the past five years, China emerged as the third largest importer of Indian tea as demand for the black variety has been soaring there

Just when Indian tea exports to China were rising, the trade is likely to take a hit because of worsening Indo-China relations, following a military standoff at four points along the Line of Actual Control.

Over the past five years, China has emerged as the third largest buyer of Indian tea. In 2019, India had exported 13.45 million kilogram (mkg) tea to China as against an export of 10.31 mkg in 2018.

“As relations between India and Pakistan soured, the tea trade took a beating. It is a wait and watch situation for us now,” Vivek Goenka, chairman of the Indian Tea Association (ITA), said.

Planters from Assam said despite the Covid-19 pandemic, trade enquiries from China had been rising. However, owing to the growing conflict, enquiries may dry up. “We have seen how the trade dried up in case of the Pakistan conflict and fear the same,” a planter from Assam said.

However, exporters are of the view that even if the Indo-China trade is affected, Indian tea will find many global takers.

"Production this year has suffered, and there is a high demand in the market for Indian tea. Even if the trade gets affected in one global market, there are others who are eagerly awaiting Indian tea," an exporter from Kolkata said.

Tea production in Assam and West Bengal is estimated to have declined by 65 per cent during March-April, and it may further decline by 50 per cent during May.

Atul Asthana, managing director at Goodricke Group, said while such scarcity will create huge demand and a price surge in the market, plantation firms and exporters will grapple to meet the global demand.

According to data sourced from the Tea Board of India, a total of 1.47 mkg tea was exported to China during January-February, making it the third largest global destination for Indian tea.

Last year, India had pipped Sri Lanka to become the largest tea exporter to China as demand for Indian black tea, especially the Assam variety, had been on the rise. Traditionally, the Chinese have been making and consuming green tea, but sources said the demand for black tea among the youth has been on a rise.