South India plans to double Tea exports to Malaysia, Indonesia

Tea exporters from South India are exploring opportunities to double their exports to Malaysia and Indonesia by joining hands with the tea industry in those countries. The exporters’ organisation has signed a Memorandum of Understanding (MoU) with trade representatives in Malaysia to double exports and to create a brand which will cater both domestic and export markets. With Indonesian industry, Indian exporters are exploring to see whether they can create new blended products for that market.

Dipak Shah, chairman, South India Tea Exporters’ Association (SITEA), who led the delegation on a four-day visit to Malaysia and Indonesia last week, said that an MoU has been signed with with the Tea Trade Association of Malaysia. “We will work together to establish a strategic co-operative partnership to facilitate companies from the two countries to communicate and co-operate in the production, trade and investment of tea sector, develop commercial co-operation to increase the tea trade and to negotiate long term contract on the basis of mutual benefits, exchange of infrastructure, technology and others,” he said.

He added that Indian exporters may look at creating a new brand that will cater to both domestic and export markets. The Malaysian industry has assured they would work towards doubling tea import from India in the next two years,” Shah told Business Standard
Currently, Malaysia imports around 7-8 million kilogrammes of tea from India, a major chunk of which is from South India. Going forward, too, SITEA expects tea exports from the South will be higher due to various advantages like cost, quality and varieties. Shah agreed that currently competing countries like Indonesia, Sri Lanka, China and others are enjoying around 5% cost benefit due to duty. “But many times this benefit gets nullified as tea prices in South India is competitive compared to competing countries,” he said.

For instance, currently prices of South India is around Rs 90-100 a kg, while Indonesian tea is around Rs 120-130 a kg. The price in South India is almost Rs 200 per kg lower than the price in North India, which makes South India attractive for these countries.

The delegation also visited Indonesia and held discussion with the local industry. “Our major focus (during the discussion) has been how to work together to create an exotic blend,” said Shah adding that one of the other discussion points was to create a brand and catering to international customers. He added, the units which have EOUs in India can import tea from Indonesia and process them here and can send it back to export market. The Association has met 43 people from the tea industry in Indonesia and held discussions. Indonesia imports between 3-4 million kgs from India, again major chunk of it are from South India.