India’s tea exports to Bangladesh have stumbled after Dhaka raised import duties, sparking concerns within the industry. UK Singh, chairman of the Assam Branch of the Tea Association of India (TAI), addressed these concerns at the association’s recent General Meeting in Tezpur.
Duty Hike Impacts Trade Dynamics:
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The increased import duties in Bangladesh have disrupted trade, impacting Indian tea exports despite Bangladesh’s crucial role as both a major tea producer and consumer. This comes at a critical juncture when Bangladesh’s impending LDC graduation may further restrict duty-free access for Indian tea under SAFTA.
Proposed Solutions for Trade Boost:
To navigate these challenges, Singh proposed exploring trade agreements like a Comprehensive Economic Partnership Agreement (CEPA) or a Preferential Trade Agreement (PTA). These agreements could liberalize trade, reduce tariffs, and foster investment between India and Bangladesh. Additionally, India has proposed measures like increased trans-shipment via its ports and importing tea from its northeastern states bordering Bangladesh, aiming to streamline logistics and boost connectivity.
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Barak Valley Holds Potential:
Singh highlighted the potential of Barak Valley tea, whose characteristics resonate with Bangladeshi preferences. However, he emphasized the need for a roadmap addressing trade-related issues and infrastructure upgrades at Land Customs Stations to facilitate smoother tea export.
Industry Challenges: Price Stagnation and Imbalance:
Despite commendable production growth, tea prices have remained stagnant, except for a brief pandemic surge. This mismatch between rising input costs and stagnant prices poses a major challenge for producers. Furthermore, an imbalance between tea production and demand puts downward pressure on prices.
Market Concentration and Solutions:
The tea market’s concentration among a few major players raises concerns about the well-being of smaller producers. To address this, strategies aimed at creating long-term demand for tea and potentially implementing short-term supply adjustments could help achieve sustainable price growth for the entire industry.
Climate Change Resilience:
Singh also emphasized the tea industry’s vulnerability to climate change and the need for research on how tea yield responds to climatic variations. This understanding can help assess the industry’s resilience and inform adaptation strategies.