US airstrike on Iran may impact business of Indian tea planters, exporters

What happens if the US refuses to exempt Chabahar port from sanctions, said an exporter

The sudden turn of events in West Asia, centred around the US airstrike on Iran in which a top General was killed, has tea exporters and plantation companies worried.
 
The development comes just as Iran has emerged to be the top export destination for Indian tea, outpacing even Russia and other traditionally key markets. The worry now is that escalation of tension in Iran and more of trade sanctions on this country would direly impact the boom in tea shipment.
 
An exporter to Iran said, “Stability is crucial for trade and with the US repeatedly resorting to airstrikes and Iran promising retaliation, there is cause for worry.”
 
Indian tea export to Iran crossed 50 million kg (mkg) for the first time in a year during January-November 2019. The country exported 50.43 mkg in these 11 months to Iran, at a high unit price of $3.91 (Rs 280) a kilo. This catapulted Iran to become the largest export destination. In value terms, the export to Iran has doubled from a year before, at $197.4 million (Rs 1,415 crore).
 

“The situation has become complicated. Iran is India’s top orthodox tea importer and estate companies have been focusing on orthodox tea lately. If export to Iran is jeopardised, there is going to be serious problem with plantation companies,” said a planter exporting to Iran.
 
The Tea Board of India is optimistic. A K Ray, its deputy chairman, said exclusion of Chabahar port in Iran (jointly developed by both governments and linked to India shipment routes by treaty) from US sanctions, and the rupee-rial agreement between India and Iran, can shield Indian trading interests from the new tension.
 
For instance, when US sanctions on Iran had worsened last year, Indian tea export there had peaked, while Sri Lanka lost considerable market share.
 
“But, what happens if the US now refuses to exempt Chabahar port from sanctions?” wondered another exporter.
 
India Tea Association chairman Vivek Goenka said, “A lot depends on how stability will be affected in the region and what stand India takes. However, I am confident that trade with Iran will continue.”
 
Chinese tea is available in Iran but is priced at twice that of Indian produce, which is why Iranians have stuck to Indian tea.