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Omicron of Corona, possible lockdown posing new threat for India’s tea exports

Omicron of Corona, possible lockdown posing new threat for India's tea exports

Omicron of Corona variant, possible lockdowns and international border closure pose a new threat to India’s tea exports.

The threat of various stages of lockdown and closure of entry for foreigners and foreign goods in many countries as a result of the now-widespread Omicron variant of coronavirus is posing a new challenge and concern for India’s tea exports.

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‘Although it is too early to predict the impact of Omicron on India’s tea exports, we are worried that Christmas markets in some European countries are being closed due to concerns about the spread of Omicron variant of coronavirus in any variant form. Over a dozen of countries are taking precautionary steps to close borders for at least a few days,’ L Vairavan, an exporter, explained.

‘Some parts of Germany have declared that the rising number of Covid-19 cases is causing such concern that protecting people is their top priority, and a lockdown has been imposed. We are concerned that this will have a knock-on effect in other parts of Europe. Traffic restrictions mean fewer opportunities to export tea,’ he explained.

When winter arrives in Europe, and especially in the CIS, with waterways frozen, public transport becomes challenging, and tea exports suffer. Last year, the Covid lockdown, combined with the harsh winter in such countries, hampered smooth trade for Indian tea.

Christmas holiday season

‘So several countries used to import our tea ahead of Christmas to stock up for the harsh winter,’ said one exporter, ‘but this year, exporters had a difficult time due to a shortage of sea containers and prohibitive transportation costs. In some cases, importers pointed out that the transportation cost was greater than the cost of the tea in the container,’ Vairavan explained.

Until August, the most recent period for which official Tea Board data are available, the price of exported Indian tea rose to an average of ₹272.92 per kg from ₹230.84 in January-August 2020, representing an increase of 18.23%.

However, the higher price reduced the volume shipped to 118.84 million kg (mkg) from 134.47 mkg in Jan-Aug 2020 – an 11.62 per cent decrease. However, as a result of the higher price, overall export earnings increased to ₹3,243.37 crores from ₹3,140.04 crores in January-August 2020 – a 4.49 per cent increase.

Germany is important to Indian tea exports in terms of price and earnings, and it is one of the few countries that purchased more tea from India this year at a higher price than last year. This year, Germany imported 5.78 million kilogrammes (January-August: 5.16 million kilogrammes) at a cost of ₹343.84 per kilogramme (₹250.47 per kilogramme), for a total cost of ₹198.74 crores (₹129.24 crores).

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The CIS remained at the top of India’s tea export table, albeit with lower volume, price, and value than the previous calendar year. CIS imported 28.18 mkg (34.51 mkg) at a cost of ₹188.44 per kg (₹164.97) for a total of ₹531.02 crores (₹569.32). Iran came in second with 15.47 mkg (23.87 mkg), paying ₹254.74 a kg (₹267.23) and spending ₹394.08 crores (₹637.87 crores). Ireland paid the highest price of ₹748.65 per kg (₹742.59). In terms of value, the US was second only to the CIS, with ₹408.23 crores (₹254.40 crores).