Indian Orthodox Tea Exporters To Benefit From Sri Lankan Crisis, Says ICRA

June, 23, 2022

Indian orthodox tea producers and exporters could potentially benefit from the current economic crisis in Sri Lanka, said rating agency ICRA.

Tea production in Sri Lanka, which is the largest exporter of orthodox teas globally accounting for 50 per cent of global trade, has been impacted in recent months due to withdrawal of the use of chemical fertilisers in the island nation.

The current difficult economic situation is also likely to impact production and costs in 2022, the rating agency said.

In addition, the current economic strife is likely to limit the ability of estates to spend adequately to sustain production at historical levels going forward.

Key large common markets for the two countries are CIS nations (mainly Russia), Iran and the UAE. With production in Sri Lanka likely to be impacted, this provides an opportunity to Indian orthodox tea players to increase exports in the current year 2022. India and Sri Lanka are two two major competitors in the tea business.

"In the current geo-political situation, establishment of a successful bilateral trade and payment mechanism between India and Russia may put India at a relative advantage, compared to Sri Lanka as a supplier of quality orthodox teas," it said.

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