MFN status will spur Indian tea exports to Pakistan

KOLKATA: Reeling under onslaught of fierce competition from Kenya and Sri Lanka, Indian tea planters are waiting for Pakistan to grant most favoured nation (MFN) status to boost exports across the border.

“We are keenly waiting for Pakistan to grant MFN status to boost exports across the Wagah border as our tea will have a price advantage over competitors with zero import tariff and lower overheads,” said state-run Tea Board executive director R. Ambalavanan told IANS news service.

Though Indian exports to Pakistan more than doubled to 18.9 million kg in 2010 from 7.5 million kg in 2009 and to 10.6 million kg in first six months (Jan- June) of 2011 from 9.5 million kg in same period in 2010, a substantial quantity of the beverage is unofficially shipped or smuggled into the neighbourhood through third countries (Dubai & Afghanistan).

“MFN status will immensely benefit growers as well as exporters by avoiding middlemen and availing of 10% tariff exemption Pakistan levies on tea imports. Shipments through Wagah border will also reduce logistics costs,” official said.

As third largest importer after Russia/CIS, Britain & United States in 2010, Pakistan buys more tea from Kenya & Sri Lanka than from India, which is the second largest producer and consumer after China of aromatic beverage. China, however, produces (1,475 million kg in 2010) and consumes green tea, while India (966 million kg) and other leading producers like Kenya (399 million kg), Sri Lanka (331 million kg), Vietnam (157 million kg) grow crush-tear-curl (CTC) tea and orthodox tea.

In spite of unit price declining to Rs.63 per kg from Rs.89 per kg, Indian exports to Pakistan nearly doubled to Rs.120 crore in 2010 from Rs.67 crore in 2009. In first six months of 2011, export realization from Pakistan was Rs.68 crore as against Rs.63 crore in same period of 2010 despite lower unit price value.

“Though India has accorded MFN status to Pakistan, non-tariff barriers continue, affecting bilateral trade between the two countries. Unless these are resolved, merely granting the status will not benefit us much in terms of trade or volumes,” a tea exporter said on margins of planters’ annual conference.

Catering to a large domestic market with growing consumption, quantity for exports is limited, though Indian teas are qualitatively competitive in international auctions. “Unlike our fierce competitors (Kenya, Sri Lanka & Vietnam), which export nearly 90% of their production, about 80-85% of what we produce is consumed domestically leaving less for exports in value terms despite huge potential for our tea in traditional and emerging markets,” Ambalavanan asserted.

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