A clutch of tea exporters has been asked by the regulator Tea Board to show cause as to why their licences should not be suspended or cancelled after being found, allegedly, passing off cheap African teas as premium India varieties to the overseas markets.
The action of the Board adds to the credence to what stakeholders of the tea industry have been complaining — that a section of tea traders is gaming the system and flouting the laws of the land, tarnishing the value of brand India at the global stage, undercutting prices offered by law-abiding exporters and adding to the oversupply situation in the domestic market.
Confirming the development, a source in the Tea Board explained its actions against errant exporters. “Indian tea is a brand globally. We have to ensure the image of the country, the brand value, is protected,” the source said.
The Tea (Distribution and Control) Order, 2005, empowers the Board, which operates under the aegis of the Union ministry of commerce, to suspend or cancel licences required to both import and export teas.
According to the Tea (Distribution and Control) Order, 2005, re-export of teas is allowed only under the label of ‘multi-origin’ and not ‘India’. However, some entities have been found importing cheap teas of African origin, mostly from Kenya, duty free under advanced licence and re-exporting under the garb of premium Indian origin, making a killing.
A notification issued by the board on December 22, 2021 had stated that ‘exporters shall clearly mention the origin of tea in packages and invoices while exporting. Any tea exported as Indian tea or as any nomenclature of Indian tea shall comprise 100 per cent of such Indian tea”.
It further clarified that ‘in case Indian tea is blended with imported tea, the same shall be exported as multi origin tea and should not be marked as teas of Indian origin under any circumstances.’
Import surge
In 2024, Kenya toppled Nepal to be the top destination for tea imports to India, a nation which grapples with chronic oversupply that had put a lid on tea price inflation, much to the displeasure of the Indian planters who often complain of unremunerative prices. Import from Kenya stood at 18.04 million kg, at an average price of $1.75 a kg.
The trend continued till January and February, when imports to India from Kenya rose 271 per cent and 87 per cent, respectively.
Overall, India imported over 44 million kg tea in 2024, a record, while export also spiked to an all-time high of 254 million kg.
Alarmed by the high import, planters urged the Centre and the Tea Board to take action. In a letter, Hemant Bangur, chairman of the Consultative Committee of Plantation Association (CCPA), wrote to the Tea Board deputy chairman Saurav Pahari that at least 30-35 million kg imported teas are being mixed with about 210 million kg of Indian origin teas and ‘fraudulently re-exported as Indian tea’.
He also pointed out that the ‘maximum violation’ is being done by a handful of 5-6 major exporters to Iraq although this has now spread to key markets such as Iran and others.
“This violation is causing irreparable harm to the image of Indian tea globally and portraying us as unreliable suppliers. Moreover, the passing off of imported tea is affecting demand of Indian tea and sustainability of the industry,” Bangur wrote on April 23, adding that the industry would have no complaints if re-export is done as ‘multi-origin tea’.
Speaking to The Telegraph on Friday, Bangur highlighted the need to create a standard operating procedure. “We need to create an SOP for import and export of teas. The Tea Council, working under the aegis of the Tea Board, is preparing one. The SOP will act as a deterrent. At present, people may be flouting the law due to lack of a deterrent,” said Bangur.
At least one of the recipients of the show cause notice sent by the Tea Board believed to have gone to court. Anup Kumar of SSK Exports, which filed a writ petition, declined to comment as the matter is sub-judice. The others who have received the notice are Vikarama Impex, Saman Tea, Shah Brothers and Bhauram Jodhraj.