Indian tea exporters worried as Iran resumes world trade

Jasleen Kaur | The Dollar Business 

Removal of trade sanctions from Iran may trigger a new challenge for Indian tea exporters as the Islamic republic is likely to renegotiate its existing import contracts with Indian suppliers for converting its trade into dollar term.

 At present, the trade realisation between India and Iran is carried out as per the rial value. Now, the United Nations has lifted the trade sanctions from Iran following a nuclear agreement, analysts say that the country may ask its trade partners to forge fresh deals on dollar rates.

Though the move will help Iran in saving on its forex outflows, Indian exporters may face huge losses due to stiffer competition among suppliers.

“It is not good for India if they start dealing with Iran in dollar rates. Iran has more options like Kenya as Iran was one of the main exporters of Kenyan tea,” a spokesperson from Limtex—a tea export firm—told The Dollar Business.

For Iranian importers, buying tea from India costs around $4 per kg, almost equal to the price offered by exporters from Sri Lanka without any difference in terms of quality.

As per the Tea Board data for the January-November 2015 period, Iran which is the second largest market of Indian tea had imported the beverage worth more than Rs.425 crore, almost 12% of the country’s overall tea exports value.

January 27, 2016 | 04:20pm IST