Sri Lankan economic crisis may provide opportunities for Indian tea exporters: Experts

KOLKATA: Mounting economic woes in Sri Lanka, a major player in the global tea market, may provide opportunities for Indian exporters of the commodity as the island country is set to witness a significant decline in its production and shipments this year, industry stakeholders and experts said on Monday.

Sri Lanka produces around 300 million kg of tea annually and is predominantly an orthodox tea producer.

The country exports around 97-98 per cent of its annual output, rating agency ICRA Ltd's vice president Kaushik Das said.

Sri Lanka accounts for around 50 per cent, if not more, of the total global trade of orthodox tea and exports the beverage to mostly west Asian countries such as Iraq, Iran and UAE, and North African destinations like Libya along with Russia and Turkey, he said.

"A significant fall in Sri Lanka's tea production will have an impact on the global market and also provide an opportunity for Indian exporters to fill the gap," Das told PTI.

With the growing economic crisis in the island country, tea factories are struggling to run their operations, said South India Tea Exporters Association chairman Dipak Shah who had recently returned from Sri Lanka's capital Colombo.

"Almost all units in Sri Lanka are witnessing power cut for almost 12-13 hours a day and have not enough fuel to run their generators. Generally, disruption in the production process leads to a decline in quality. Apart from this, there is less rain. I think the production could fall by 20-25 per cent in our neighbouring country," Shah told PTI.

He also said such a scenario could provide "much better days for Indian exporters", particularly if the trade with Russia gets improved with a rupee-ruble payment mechanism.

Indian Tea Exporters' Association Chairman Anshuman Kanoria said the industry is expecting that the island country's crop might be lower by around 15 per cent this year because of its economic condition.

"Shortages of fertiliser, diesel and other production inputs would hit its output. We have already seen international buyers, who need Sri Lankan tea for their blend, have started paying higher prices as tea from that country has become expensive by around 10-20 per cent," he told PTI.