China is India’s second biggest trading partner after the US. Trade with China began to flourish in early 2000s. In 2022, bilateral trade stood at $136 billion, which was 11.6 per cent of India’s total merchandise trade of $1,170 billion. Trade deficit with China is massive, over $101 billion, with India’s goods exports at only $28 billion.
This can be attributed to two factors: narrow basket of commodities; and market access impediments to most of India’s agricultural produce and to pharmaceutical products, among others, where India is competitive.
But tea is one product which is exported to, and not imported from, China.
China is the largest producer and consumer of tea in the world. The country mainly has green tea, but black tea consumption is growing rapidly amongst GenNext. To cater to the growing domestic demand for black tea, China has started importing from India, Sri Lanka, Kenya, etc.
India is the largest black tea producer in the world and offers a wide bouquet of teas. The aroma and flavour of Indian teas, particularly of Assam and Darjeeling origins, are liked by Chinese consumers. In the last six years, China has doubled its tea imports — from 23 million kg in 2016 to 49 million kg in 2022. But tea imports from India are stagnant at 4-5 million kg after peaking, at 13 million kg, in 2019. This calls for introspection on how to make inroads into this big market.
India is ahead of China as far as bulk tea disposal — that is, public auction — is concerned. The Chinese Government is interested in setting up an e-auction platform. Sri Lanka conducted a dummy auction in 2018 in Beijing. Thereafter, China Tea Marketing Association (CTMA) attended the Calcutta Auction and studied India’s robust e-auction system. Tea Board of India or Indian Tea Auctioneers’ Association can take the lead in helping China set up an auction platform.
Considering the growing popularity of black tea, India needs to draw up action plans and implement them for success in the Chinese market. Here are some suggestions: identify blends, types of tea liked by the Chinese; learn from China the art of making Oolong tea, and modern packaging techniques; create a direct Indo-China tea e-channel that connects Chinese tea buyers with Indian suppliers; collaborate with organisations like CTMA for sustained promotion of various types of Indian tea; and arrange buyer-seller meets. Implementation of these suggestions could make China the leading destination for Indian tea in the near future.
The Government also needs to chip in by providing better export infrastructure, fully defraying State duties by increasing the RoDTEP (Remission of Duties or Taxes on Export Products) rate and reducing the interest rate on borrowings to make Indian tea producers/exporters more competitive in the international market.
The writer is a tea marketing expert and a former Secretary, Indian Tea Association