Iran keen to lift whole leaf teas from India, ready to pay good price


Kolkata: Iranian buyers have initiated negotiations with Indian tea trade to procure whole leaf teas to meet the country’s domestic demand.

The Gulf nation, which was severely hit by the pandemic, is ready to pay good prices to the Indian tea exporters and the contracts will be signed by second week of March when new season teas in small quantities will slowly start arriving in the market.

“Iranian buyers are keen to lift whole leaf or orthodox teas from India,” Mohit Agarwal, director at Asian Tea & Exports, told ET. “They are offering us good prices for these teas. Sentiment in Iran is upbeat as Covid cases have come down. Also, with Joe Biden becoming the president of the US, they are hopeful that positive steps will be taken towards the sanctions issue.”

Agarwal added that the exporters are hopeful to achieve exports of nearly 54 million kg to Iran this year, a volume that was achieved in 2019.

Due to the pandemic and payment problems in Iran, exports had come down in 2020. According to Tea Board of India statistics, India exported 31.06 million kg of tea between January and November 2020, as compared to 50.46 million kg in the same period of 2019.

Iranians are fond of tea and import high quality tea from India and Sr Lanka. Though Iran produces 20-30 million kg domestically, the quality of teas is not good. That is why the country imports orthodox teas from India and Sri Lanka. Iran imports 65-70 million kg of tea annually.

Indian orthodox or whole leaf tea producers, mainly from Assam, are heavily dependent on the Iran market. “Iran will become a strong buyer for orthodox tea this year,” said Vivek Goenka, chairman of Indian Tea Association. “The gardens in Assam produce around 70 million kg of orthodox teas.”

The United Nations had imposed sanctions on Iran a few years ago but allowed Iran to import food products like tea, and India to import petroleum products. Later, India and Iran governments made a Vostro payment mechanism through which a portion of oil import proceeds was converted to rials and then to rupee. UCO Bank was authorised to deal with all payments in rupee. Gradually, India established itself as the largest tea exporter in Iran, replacing Sri Lanka, which did not have any special payment mechanism.

The system was severely affected when the US imposed further restrictions on Iran and oil imports were stopped after May 2019. Vostro account thus shrank and since end-2019 payments were severely affected. Central Bank of Iran restricted rupee allocations and all payments were delayed for a long time.

Agarwal said that though many exporters are yet to get payments from Iran against exported teas, but since sentiment in Iran has turned positive, payment would start coming soon. In fact, basmati exporters have started getting their payments from Iran, which has raised the hopes of the Indian tea trade.

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