KARACHI, April 14: Black tea import from India is gradually increasing and a 15-member delegation of the Pakistan Tea Association (PTA), including representatives of multinational tea companies, is heading for an eight-day tour to India on Saturday to further foster tea trade between the two countries.
Pakistan imported 9.5 million kg of Indian tea in 2005 as against 6.5 million kg in 2004. The import from India is estimated to cross 10 million kg by the end of this year. Black tea is imported from 19 countries.
“We will meet producers, traders and brokers in New Delhi, Kolkata and south Indian states of Coimbatore and Coonoor,” PTA Chairman Mohammad Altaf told Dawn on Friday.
The exchange of visits by tea delegations of both the countries has become an annual feature and this has paid off with an increase in arrival of Indian tea into the country.
Usually Pakistan imports tea from the south Indian states which costs one dollar per kg (C$F) Karachi. The real quality tea basically hails from north Indian state of Assam whose price ranges between $2 and $2.5 per kg, but Pakistan imports only 10,000-20,000 kg a year due to its high cost. However, the same quality was imported from Kenya at a rate of $1.75 per kg, Mr Altaf said.
“Our main aim to visit India is to lessen the dependence on Kenya black tea which accounts for 65 per cent of total black tea consumption in Pakistan,” he said. Only Assam is a substitute for Kenyan tea, but its price is too high. Besides, Pakistanis are very fond of Kenyan tea because of its flavour, aroma and taste as compared to Indian tea.
Cheap Indian tea is blended with higher quality tea. “There is a lot of scope to boost tea trade with India,” he said, adding that it was not possible to get the north Indian tea at reduced rate because it is sold in an open auction held every month like other tea producing countries.
The PTA delegation will hold discussions with leading Indian tea producers and traders to find out possibility of price cut.
He said at present Pakistan’s tea industry was facing a crisis-like situation owing to drought in Kenya. The African country has seen a loss of 10 per cent or 35-40 million kg in tea production. This situation has pushed up the price to $2.80 from $1.90 per kg.
As a result, the PTA chief said, Unilever had increased tea prices by Rs16-20 per kg in the local market, while other blenders are likely follow suit.
On the other hand, smuggling of tea is also thriving. He said the PTA had informed Prime Minister Shaukat Aziz that Pakistanis had sipped 27.66 million kg of smuggled tea in the last nine months of the current fiscal year as compared to 17.64 million kg in the same period last fiscal year. The exchequer is reported to have suffered a loss of Rs1 billion because of tea smuggling under the Afghan Transit Trade Agreement (ATTA).
During July-March of the fiscal year 2005-06, legal imports stood at 83.67 million kg as compared to 100.5 million kg in the same period last fiscal year, showing a drop of 17 million kg.
Mr Altaf pointed out that the association had been urging the government to bring import duty on tea imports to zero from 10 per cent in order to curb the inflow of smuggled tea, but the government had yet to take any decision.
The PTA chief said legal tea import stood at 118 million kg in 2003, rising to 117 million kg in 2004 and to 133 million kg in 2005. However, it is projected to fall to 115 million kg by the end of 2006. Similarly, tea smuggled through the ATTA in 2003 stood at 42 million kg, rising to 47 million kg in 2004 and dropping to 40 million kg in 2005. However, tea smuggling is expected to stand at 60 million kg by the end of 2006.
The Kenyan tea production dropped to 45 million kg in the first quarter of 2006. In 2003, it was 80 million kg, rising to 85 million kg in 2004 and to 90 million kg in 2005.
“There is a need to remove import duty on Kenyan tea in order to offset a rapid escalation in local tea prices,” Mr Altaf added.
