Iraq may open doors to Indian tea after 10-year hiatus

The Baghdad Chamber of Commerce has invited Indian tea companies to participate in the first tea festival in Iraq which will be held at the end of this month. This will help the Indian tea companies that produce around 1,400 million kg of tea a year to network with Iraqi buyers and regain the lost market.

Confirming the invitation, Sujit Patra, secretary of the Indian Tea Association (ITA), said: “Iraq had been a major market for Indian tea till 2006. But subsequently, due to various issues which included a delay in payment, Indian exports gradually dwindled and came to a complete halt somewhat around 2011-2012.”

The Iraqi government used to procure tea from India under the UN’s food for oil scheme.

In those days, Iraq used to import around 80 million kg of tea, including 40-45 million kg from India. However, since 2007, Sri Lanka has replaced India as the top supplier and currently accounts for more than 80% of the Iraq market. Meanwhile, Indian exporters gradually lost all contacts with Iraqi buyers.

Following the Baghdad Chamber of Commerce’s invitation, the Embassy of India in Baghdad has approached the Tea Board for participation along with Indian tea companies in the tea festival on November 28-29.

The ITA executive said the two countries enjoy long-standing trade, cultural and political relationships. India has sufficient supplies of the type of tea that Iraq imports, and at various price points.

“To regain the lost Iraq market, the ITA has requested the Tea Board and Indian embassy’s active support to rebuild confidence and relation with the Iraqi buyers. We hear that some Indian teas enter Iraq through Dubai, but there are no direct exports. Therefore, direct export needs to be restored,” Patra said.

India’s tea exports were at an all-time low of 119 million kg during January-August this year. The shipments for this period last year totalled 135 million kg. Higher shipment cost, payment problems in Iran and higher exports of Kenyan tea in the global markets at much lower prices have impacted Indian exports this year.

The Indian tea trade has requested the government to work out a free trade agreement or preferential trade agreement with Bangladesh, Iran, Russia and Turkey to boost exports.

India’s competitor in the global tea market, Kenya and Sri Lanka, have already worked out such arrangements with importing nations. Kenya has taken advantage of zero duty with Egypt and made preferential quid pro quo trade agreement with Pakistan, the second largest importer of tea. Sri Lanka has made barter arrangements with Turkey, a tea producing country with high import duty, and is now negotiating with China and Bangladesh for preferential trade agreements.