Wednesday, 30th July 2014

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India wants Ceylon Tea to spread aroma

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Indian tea industry has now adopted a comprehensive plan to upgrade quality and increase productivity of the industry which is one of the World’s largest. In a giant stride towards innovation,  India’s Tea Board has just lined up Rs1.5bn ($27.25m) in funding for research and development work, of which Rs.200m will be spent on developing weather resistant tea clones.Another Rs.3.5bn has been allocated for replanting ageing bushes that are affecting the overall production of Indian Tea, which has been stagnating at 980m kg for a couple of years.

The Indian Tea industry, as Economic Times reported, is also looking at an inclusive growth and has also earmarked Rs.2m for improving the condition of its tea estate workers in the 12th plan period that came into effect on April 01 this year.Introduction of ‘Weather resistant tea clones’ is a major development as far as tea industry is concerned. One of the major challenges faced by the tea industry, be it in Sri Lanka or India, is the inclement weather conditions that cripple the industry from time to time. Sometimes the industry, as a whole, suffers due to decrease in production, primarily caused by inclement weather conditions. India, one of the largest tea producers in the world has now embarked upon a mission to find a viable solution to this problem. What enables them to kick-start such a mission is innovation and research, which have now become an integral part of the Indian tea industry.

Innovation and vibrancy of the Indian tea industry create a great impact on that of Sri Lanka as both industries are strongly connected to each other through various business ventures on the Tea front. For instance, Tata Global Beverages, which was previously Tata Tea, is involved in the management of Sri Lanka’s Watawala Plantation PLC.  The latter is managed by Estate Management Services (Private) Limited which is a joint venture with Tata Global Beverages. Hence, Sri Lanka has already developed a strong connection with India through which both countries can share each other’s advancements and achievements.
Harish Bhat, Managing Director of Tata Global Beverages, who was on a recent visit to Sri Lanka, made some important remarks on Sri Lanka’s tea industry. While elaborating on the ‘sharing culture’ which has developed between the tea industries of both countries, he also stressed the need of strengthening the position of Ceylon Tea in markets in the international market, although it already has a strong equity in several key markets.  Like Cambodian Coffee and Darjeeling Tea, Sri Lanka too should strengthen the position of its flagship brand ‘Pure Ceylon Tea’ in the international market he said adding that Ceylon Tea has a strong demand from the international market, particularly from India, Russia, Australia and the Middle East. 

Meanwhile, some are of the belief that liberalization of tea imports is a strategy to make Sri Lanka a hub of global tea. Adding value to tea imports, they say, will take Sri Lanka towards a new dimension in the global tea industry. However, the government firmly believes that liberalization of tea imports will severely affect the quality of the brand ‘Ceylon Tea’.

Addressing a tea dealer conference in Colombo last year, Treasury Secretary Dr. P.B. Jayasundara stated that all existing imports of tea should be phased out within the next three years in order to strengthen the brand ‘Ceylon Tea’ and increase exports.“Sri Lanka should ban altogether importation of tea in order to ensure absolutely regulatory controls and supervision to maintain the integrity of tea, which should increase its export earning potentials three times from the current level at least over the medium term,” he said. That highlights the fact that the government does not intend to dilute the standards of Ceylon tea by accommodating a laissez-faire policy on tea imports.

What we need now is a fresh strategy to market the brand Ceylon Tea beyond the shores of Sri Lanka.  During the Tea Strategy Forum held in Colombo in January, Janaki Kuruppu, Chairperson of the Sri Lanka Tea Board said, targets an export revenue of US$ 2.1bn and value-added tea exports to increase from 40 percent to 60 percent under a medium-term plan. She added that the tea export income last year was Rs. 160bn, a 9.5 percent increase from 2011, supported by the depreciation of the Sri Lankan rupee.

Tea exports of Sri Lanka have failed to maintain consistency since 2002. Although Sri Lanka was the world’s second largest tea exporter in 2001, we were gradually overtaken by China and India. It is true that we still have a formidable position in the global tea market: but as Bhat precisely pointed out, if we fail to penetrate into new markets, the position we maintain at this moment could shake in the face of challenging market conditions.

The key strategy here is to advance the quality of the brand ‘Ceylon Tea’, with the support of highly vibrant Indian tea industry. If Sri Lanka can further expand the sharing platform with India as far as the tea industry is concerned, we will certainly be benefitted by India’s endeavors on the research and innovation front. That will enable Sri Lanka to offer a better product to the world capitalizing on its strong equity in several key markets while penetrating into newer and newer regions.

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