Indian Tea Producers Change Strategy Amid Decline in Trade with Iran

19 February 2024

Every morning, we start our day with a cup of tea, for a fresh mind for a whole day. This tea, which makes our day is not just a beverage, it has thousands of years of history, from its origin in ancient times to its popularity today, tea has captivated people with its diverse flavours with cultural tastes.

Unfortunately, the producers of invaluable taste with the cultural significance of tea in India, are facing issues with losing market as trade with Iran has declined over the past five years. This decline in the tea trade with Iran affected the beverage industry with a downgrade in their business revenue and the shrinking of the market.

Let’s summarise how the Indian tea market is popular and what amount of tea products are exported to Iran from India. Also, get complete industry insight into the tea market business.

India’s Total Export of Tea

From the given table, you can observe the export of tea from India to Iran in terms of total trade value per million USD for the past five years. There is a remarkable downward trend in the Indian exported tea from the year 2019 to 2023 Till Oct, and the most significant decline was witnessed in 2022 with just 85 million USD from 226 million USD in 2019, this downward trend further accelerated to touch 23 million USD in 2023 till Oct. 

India’s Total Export of Tea, Coffee and Spices

If you look India’s overall export of tea, coffee and spices to both Iran and the world, is fluctuating over time. India’s exports to Iran registered a record-high downfall from 258 million USD in 2019 to 34 million USD in 2023 till Q3, while India’s exports of the same products to the world are witnessing a record high year on year from 33 billion USD in 2018 to more than 40 billion USD in 2022. These increasing trends worldwide indicate that there is a consistent demand for Indian tea and other related products (Under HSN Code 09). Understand this global export demand from India through a persuasive graph and attractive charts mentioned below.

Iran’s Total Export-Import of Tea, Coffee and Spices to World

Based on the given table, Iran's export of Tea and other products from the year 2019 to 2022 declined whereas import of the products from Iran continuously increased at a faster pace except in the year 2020, this possible downfall may be attributed to the worldwide lockdown due to COVID-19. A slight recovery in the import of Tea and other products after the year 2020, shows a potential opportunity for Iran to expand its tea market across the globe.

Major Reason for Decline in India-Iran Tea Trade

The fluctuation in export-import from Iran can be attributed to various factors such as changes in global demand, economic conditions, trade policies and geopolitical factors.

Let’s understand the potential reason behind this continuous decline in export business from India to Iran for tea and related products.

                1.     Presence of pesticides and chemicals beyond the permissible limit.

                2.     Shortage of shipping containers and higher freight cost

                3.     Geopolitical issues and the diplomacy

                4.     Facing strong competition from Kenya and China

                5.     Demand for trade in local currency

                6.     Concern about sanctions in trade with the Dollar

What are the export Opportunities for Tea Export from India

                 1.     India is the largest producer of tea in the world after China

                 2.     Geographical location

                 3.     Countries' diplomatic relations with other countries

                 4.     Tea from India witnessing a continuous growth rate

India’s particularly tea exports to Iran are fluctuating, and showing bitterness in trade relations. However, strategies to enhance competitiveness, explore new markets and improve product quality could help both to capitalise on the opportunities.