Israel-Hamas war: Tea exporters worry conflict spillover to Iran

A possible spillover of the Israel-Hamas conflict into other regions of West Asia, especially Iran, is worrying tea exporters.

Tea export volumes to Israel are insignificant. But any repercussions on Iran, one of the top buyers of Indian tea, will impact the industry, exporters apprehend.

The top export destinations for Indian tea during January-December 2022 were the UAE at 42.38 million kg (mkg), Russia 41.12 mkg, and Iran 21.61 mkg. Some teas to Iran are also routed through the UAE, a major re-export hub.

Anshuman Kanoria, chairman of the Indian Tea Exporters Association, said exporters were watching this unfolding situation with concern. “From our point of view, any impact on Iran will be a matter of concern. There are pending orders in the pipeline; there is cargo on the water. It's early days, we just have to wait and watch," he added.

Iran's alleged involvement in the Hamas attack has been reported in the international media. However, the Israeli military has said that there was no concrete evidence of Iranian involvement. But any escalation of the conflict is likely to spell trouble for the Indian tea industry.

Iran is predominantly an orthodox tea market. While Assam has the largest exposure, South India also has a stake in exports to the region.

Dipak Shah, chairman of the South India Tea Exporters Association, said there was fear in the industry. "Exporters want to ship as early as possible. But there is uncertainty over payment and apprehension about disturbance in the movement of cargo going forward."

“A large chunk of South Indian orthodox and Crush, Tear, Curl (CTC) teas are going to Dubai, for ultimate re-export to countries like Iran and Iraq," he pointed out.

Mohit Agarwal, director of Asian Tea Company, said: “There is nervousness among the export community because of our dependence on Iran. We are keeping our fingers crossed that it doesn’t get drawn into the conflict.” Asian Tea is one of the top exporters of Indian tea.

Agarwal also said Iraq had been a revelation this year with a significant increase in offtake of Indian tea. According to industry sources, exports to Iraq and Turkey were showing an increase this year, while demand from Iran has been tepid.

Himanshu Shah, chairman of M K Shah Exports, said Iran had not been buying at last year's levels. "It is buying at 2021 price levels." M K Shah is one of the largest producers and exporters of orthodox tea in the country.

On the possible impact of the conflict, he said orders had been placed, so they would be executed. "As of now, there is no cause for concern. But it's early days."

The average price for orthodox leaf at Kolkata auction for January to September stood at Rs 240.34 per kg in 2021, Rs 305.32 per kg in 2022, and Rs 216.96 per kg in 2023.