The Storm of a Teacup: Indo-China Relations and Tea Trade
With huge investments made on tea processing units, continuous innovation in technology and expansion of the market, Indian tea is considered among the finest teas grown in the world. But the COVID-19 pandemic has not spared any sector, not even Tea.
Although the pandemic has brought about a sudden increase in demand for hot beverages and health conscious consumers are now choosing immunity boosting drinks like tea, the industry has seen a downward trend in business.
Tea, coffee and cocoa have been selling like hot cakes at a time when people would usually prefer cold beverages to beat the heat of the summer, not only in India but also in other parts of the world, as reported by some big global retail chains, despite which, the Indian tea sector has been crippled to an extent.
Indian tea traders and exporters were eyeing to sell Indian black tea to China as an immunity boosting drink and play the trump card by selling Indian produce to those who once held monopoly over the same.
According to Tea Board of India, 1.47 million kilograms of tea have been exported to China during January–February of 2020, making China the 3rd largest global destination for Indian tea. Last year, India overtook Sri Lanka to become the largest tea exporter to China as demand for Indian black tea was on the rise.
India’s tea exports to China have increased substantially; the country which had exported just 4.79 million kilograms of tea to China in the year 2015-16, raised the same to 12.71 million kilograms in the year 2019-20.
Despite the COVID-19 situation, tea trade enquiries have reportedly been rising but now, there are fears that amid the ‘Boycott China’ movement, trade could be hit between the two countries.
“There are lot of uncertainties now with regard to trade with China, especially after the recent India-China face-off at the Galwan valley of Ladakh,” said Bidyananda Barkakoty, Adviser of North Eastern Tea Association (NETA) and former Vice-Chairman of Tea Board of India.
The North Eastern Tea Association (NETA) is an organization that issues advice and consensus of professional opinions’ of tea producers to its members, associated groups and the government, on tea.
Earlier, post conducting a Strengths–Weaknesses–Opportunities-Threats (SWOT) analysis, the adviser of the organization had projected a better price from the second flush during the peak season.
Second flush teas (leaves plucked during May–June) are the premium quality teas of Assam. Teas made throughout the tea season (March–December) are exported to different countries at different points of time.
With the peak plucking months - July, August, September and October - approaching in which 60 percent of the tea is harvested, there was much speculation over the expected outcome of “Boycott China” campaign on tea export from the state of Assam. More so, considering that China was being looked upon as a potential market for Assam to sell black tea as an ‘immunity booster’.
“Assam produces 52% of our country’s tea. Black tea is becoming popular in China particularly among the young generation and it is a well known fact that Assam tea goes very well with milk compared to teas produced by other regions of India,” said Barkakoty explaining the reason behind why import of Indian tea has gained momentum in China.
Further, the NETA adviser said, “We have a huge domestic market – 82% of our production is sold in the domestic market and only 18% of India’s production is exported. Tea is an immunity booster and we are expecting increase in consumption of tea in the domestic market. This increase in consumption of tea in our own country is likely to set-off any decrease in exports of tea to other countries including China.”
Earlier, when the COVID-19 pandemic had just begun wreaking havoc on the country in the month of March, tea planters across the state had claimed that there was little to no supply of tea left with traders across the country anymore, despite which, in the successive month of April, a very small quantity of tea moved out of Assam.
“Our annual production this year will be at least 10% lesser than last year and there is good demand of tea in our own country,” said Barkakoty, assuring that the state has no reason to worry as Assam may be affected but not to an extent that it would hamper the economy.
To get a fair idea about the prevailing situation amid the COVID-19 fright and cross-border tensions between India and China, G Plus also sought the exporters’ viewpoint.
"Tea exports to China are only 12 million kgs and the country’s overall tea exports are around 250 million kgs. Due to the COVID situation, 100-150 million kgs have been lost because of the crop and the lockdown. We expect exports to go down by about 50 million kgs,” said Azam Monem, Whole-time Director of McLeod Russel India Ltd. which is currently the world’s largest tea growing company and is also a part of the Williomson Magor group.
“As far as exports to China are concerned, so far there is no trade embargo declared by any association or government as of yet and as we understand, it continues to be a potential market subject to direction from the ministry of commerce. If we hear anything, then we will stop exports to China,” he added.
"The supply is less and the demand is very high at the moment. So prices have gone up substantially. The crop is low because there was no production these past few months and now there are heavy rains again. China is a big market for black tea for us right now but we cannot comment yet on whether the tensions between the two countries could affect tea exports to China,” said an official of the NE Zonal Office, Tea Board of India.
The North Eastern Tea Association Adviser also asserted the organization’s stand on the issue of trade between the two countries due to the border dispute. “We will stand by government of India’s policy on trade matters with China. There is a huge potential of increase of exports of tea to China but the country comes first and trade is secondary,” he said.