Nepali Tea: Exploring Alternative Markets Amid Export Obstacles in India
Image Credit, BBC/Ashok Dahal
Due to new regulations imposed by India, Nepal’s tea exports have been nearly halted for over a month and a half. Business operators have revealed that they are considering Pakistan and Bangladesh as alternative markets.
However, they claim that the government has not yet created a suitable environment to support these alternatives.
“For example, exporting tea to Bangladesh currently incurs a 30 percent customs duty. However, Bangladesh might consider granting exemptions, but in exchange, Nepal would also need to offer similar exemptions on goods imported from Bangladesh of equivalent value. There has been no progress on this matter,” explained Aditya Parajuli, President of the Nepal Tea Producers Association.
Although Pakistan, a South Asian neighbor, is one of the world’s largest tea importers, Nepal’s tea exports there have been minimal.
Pakistan consumes approximately 170 million kilograms of tea annually, mostly imported from African countries.
Bangladesh consumes around 90 million kilograms of tea per year and is itself a major tea producer. However, it also imports small quantities of tea from India, China, and Myanmar.
Calls for Market Expansion to Third Countries
As the ongoing export blockage continues, on Wednesday in Parliament, Nepali Congress’s spokesperson Nishkal Rai urged for sustainable solutions, including “establishing domestic testing laboratories” and “securing markets for exports in third countries.”
However, Minister for Industry, Commerce, and Supplies Gauri Kumari responded that “diplomatic efforts are ongoing to resolve technical and trade barriers,” without providing further clarity.
Tea producers report that Nepal exports tea worth at least NPR 400 crore annually to India. The tea industry directly provides employment to approximately 100,000 individuals.
According to Netra Prasad Subedi, spokesperson for the Ministry of Industry, Commerce, and Supplies, while there is discussion about exporting to third countries, preparations and time are required, and market dynamics cannot shift abruptly.
“For now, export facilitation will continue primarily with India,” Subedi added.
The Undeclared Blockade
Nepal produces about 26.5 million kilograms of tea annually. Producers report roughly 20 million kilograms come from the Terai region, while the remaining 6.5 million kilograms are from hill areas.
“The current obstruction feels like an undeclared blockade,” said Aditya Parajuli, President of Nepal Tea Producers Association.
“It seems our tea sector has become entangled in geopolitics. Why is this happening when Nepal’s agricultural industries deserve the same treatment as India’s?”
Image Credit, BBC/ Ashok Dahal
Parajuli stresses that this matter must be raised and resolved at all levels of government, warning of broader negative impacts on other sectors if left unaddressed.
“India’s actions may be justified for products in high-risk categories, but since Nepal and India are in the same geographic region, our tea should not be classified as high risk,” Parajuli clarified.
Approximately 95 percent of Nepal’s orthodox tea is exported to India. For the CTC (Crush, Tear, Curl) type tea, around 10 million kilograms are produced annually, half of which is consumed domestically while the remainder is exported to India.
Nepal produces over 6 million kilograms of orthodox tea each year, with only 8 to 10 percent of that amount consumed domestically.
The majority of the remaining orthodox tea is exported to India and some European and other international markets.
How to Manage Risks When Exporting Tea to India?
On February 10, the Tea Board India issued new guidelines on tea imports.
The guidelines require exporters to collect samples from each shipment and have them tested in a laboratory prior to export.
However, the current practice of not collecting samples directly at the border but taking them from warehouses leads to very lengthy procedures.
“It takes five days for our tea to reach Kolkata, then another five to ten days to collect samples there, and an additional 15 to 20 days to receive the report,” Parajuli explained.
With testing criteria now exceeding 200 parameters, a single test failure could have significant repercussions, causing the current situation for tea exports to India to be highly precarious.
“Given these circumstances, how are we supposed to bear such risks?”