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India is looking to develop alternative export markets for tea such as Iraq, Saudi Arabia, the US, Japan and Tunisia in view of the Russian invasion of Ukraine, people aware of the matter said.
Meetings are being held with buyers in some of these countries in virtual mode, with the help of diplomatic missions located there.
Similar meetings for the remaining countries have also been planned.
“Government considering a multi-pronged strategy to counter the effects of the Russia-Ukraine war on tea exports.
"Spreading out export destinations in this manner would help to not only tide over the present crisis but would also lay the foundation for taking Indian tea to all corners of the globe,” a senior government official told Business Standard.
The Tea Board has already held meetings with major tea exporters to Russia and Commonwealth of Independent States (CIS) countries to hear out their concerns and look into ways to support them.
The exporters have called for resuming exports to CIS countries through the Qingdao route in China, which was used in the past.
“All traditional routes to Russia have been put on hold, because of which exporters came up with the suggestion to use the China route.
"This route was used long back but owing to logistics issues, it was not taken.
"However, this is a land route and a lot of distance needs to be covered. Re-establishing the route (from North China to Russia) will also take time,” another official said.
“But it is better to try it out as we don’t know how long the conflict will last,” the official cited above said.
The ongoing war between the two countries is affecting exports to neighbouring countries as well, with global shipping lines suspending cargo shipments to and from Russia.
Goods are not moving with ports being shut down due to the war.
Freight rates have further shot up. India exported tea worth $521.72 million during the first three quarters of the current fiscal year, of which 15 per cent outbound shipments were to the CIS.
Of the CIS nations, Russia and Ukraine received more than three-fourths of the exports.
Prior to disintegration, the USSR was a big market for Indian tea.
This continued even after 1991 with Russia and other CIS countries importing tea from India in large quantities.
Russia is the largest importer of Indian tea in this region.
In terms of volume, in 2020-21, out of the total tea exports of 204 million kgs, exports to Russia accounted for 35 million kgs.
For the remaining CIS nations, it was 14 million kgs.
“Exporters have also suggested repatriation of export proceeds through third parties belonging to neutral countries such as the United Kingdom and Turkey.
"They also sought restoration of guarantee by ECGC (Export Credit Guarantee Corporation of India),” the official said.
With Western nations blocking many Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment network, exporters fear payments getting stuck.
This has also impacted the realisation and repatriation of export proceeds.
