Tea Trade Scenario in the Pre and Post Liberalization Period in India

Abstract

Indian tea, which has maintained its supremacy both in production and export for more than a century, has started to lose its pre-eminence. Other tea producing countries like China,  Kenya, Sri Lanka and Kenya are strongly competing for Market share. The increase in production in China has pushed India to second position in production and the country lost its domination of the export market to Kenya, China and Sri Lanka. Given this backdrop, the present study attempts to analyse the export growth, instability in export earnings, export quantity and unit value and concentration of export destinations evaluate India’s tea export performance. The growth of export quantity, value and unit value from India (1988-2022) was worked out using compound growth rate and the results indicated an increased growth in the post–WTO period which could be attributed to the expansion in trade to the Near East, with their growth and strength of the economies in the region (Hicks, 2009). Instability in export can affect the economic growth of the country as it has adverse effect on the countries export earnings, trade balance, and confidence of international trading partners. The export instability calculated using Coppock’s instability index showed an increasing trend in the post-WTO period. In 1990’s about 6 countries viz., U.S.S.R, U.K, Iran, Iraq, Egypt and Poland accounted for about 90 per cent of total tea exports from India. But over a period of time the demand in these countries weakened. The Indian exports continue to lose volume in countries like Russia Europe, USA and some middle east countries (Dutt, 2007). The share in Iraq, Netherland and Poland was maintained and it improved in UAE, Germany, Pakistan and china. Overall in the past 3 decades, India’s world ranking as an exporter has dropped to fourthowing to competition from China, Kenya and Sri Lanka. (Majumder et al., 2010). The reduction in values of the Hirschmann index indicated increased geographic diversification of tea exports thereby reducing the possibility of market risk due to dependence on few markets. The commodity diversification in the form of various tea products exported is very limited, the major share of exports being in the form of black tea especially in bulk form. 

Received: 1 February 2024 / Accepted: 29 April 2024 / Published: 5 May 2024