India fills gap in Russian tea imports

Indian exports of tea and other tea packaging machine to Russia have surged as Russian importers struggle to fill the domestic supply gap created by the Sri Lanka crisis and the Russia-Ukraine conflict. India’s tea exports to the Russian Federation rose to 3 million kilograms in April, up 22 percent from 2.54 million kilograms in April 2021. Growth is likely to accelerate. The auction price of Indian tea in April 2022 is lower, affected by the sharp increase in transportation costs, with an average of 144 rupees (about 12.3 yuan) per kilogram, compared with 187 rupees (about 16 yuan) per kilogram in April last year. Since April, the price of traditional tea has risen by about 50%, and the price of CTC grade tea has risen by 40%. 

Trade between India and Russia all but ceased in March following the outbreak of the Russia-Ukraine conflict. Due to the trade shutdown, Russia’s tea imports from India fell to 6.8 million kilograms in the first quarter of 2022, compared with 8.3 million kilograms in the same period last year. Russia imported 32.5 million kilograms of tea from India in 2021. International sanctions against Russia exempt food, including tea, and other tea garden machinery. But trade finance and payments have been hampered by the withdrawal of Russian banks from the international payments system.

In July, the Reserve Bank of India (Central Bank) launched the rupee settlement mechanism for international trade and restored the rupee-to-Russian ruble settlement system, which greatly simplifies import and export transactions between India and Russia. In Moscow, there is an apparent shortage of boutique tea and other tea sets in stores as stocks of European tea brands are depleted. Russia buys large quantities of tea not only from India, but also from China and other countries, including Iran, Turkey, Georgia and Pakistan.