Russia-Ukraine war may hit Indian tea industry

The war between Russia and Ukraine can adversely affect the Indian tea industry as Russia is one of the biggest importers of Indian tea, according to India Tea Association Secretary Chinmoy Dhar.
Russia is one of the biggest importers of Indian tea with a share of 18 per cent in Indian tea exports. India exported 37.55 million kg tea to Russia in 2020, 45.83 million kg in 2019 and 46.91 million kg in 2018.
Meanwhile, Ukraine is not a significant importer. India's tea exports to the country stood at 2.91 million kg in 2020, 3.25 million kg in 2019 and 3.61 million kg in 2018.
As the new season for tea industry is yet to begin, the conflict is unlikely to have any immediate impact on export shipments, according to Dhar. Bulk of export shipments take place during May-October period.

However, trade ties between India and Russia may be adversely impacted as the possibility of US sanctions on Russia loom large.

"Russian market is crucial for Indian tea exports given the fact that Iran shipments continue to be plagued by payment issues which has resulted in drastic fall in export volumes," Dhar said.
If tea exports to Russia also gets impacted, it will be a serious challenge for the Indian tea industry as it would result in availability of more tea in the domestic market, thereby aggravating the oversupply situation and bringing down the prices, he added.

In a rare move, the US has slapped sanctions on Russian President Vladimir Putin and his foreign minister Sergey Lavrov, holding them "directly responsible" for Moscow's "unprovoked and unlawful" invasion of Ukraine.

The latest US sanctions build on other sweeping actions that America and partners took earlier this week targeting the core infrastructure of the Russian financial system, including sanctions against Moscow's largest financial institutions, the US Department of the Treasury said in a statement.