The Indian tea industry is feeling the heat of the conflict in West Asia. Even as the world and Tehran awaits Tel Aviv’s response to Tuesday’s attack, tea traders are worried that a wider conflict may derail the nascent recovery in export seen this year.

Majority of the Arab world, where consumption of alcohol is considered a sin, dotes on teas. India has traditionally benefited from the tea drinking habit of the region, which apart from CIS, is the largest buyer of Indian tea, orthodox and CTC.

Concerns are mounting that the trade channel may get destabilised if the conflict escalates, weighing on shipping cost and insurance premium.

“If the war widens and engulfes the region, shipping cost will rise as well as insurance premia. The shipping routes may be disrupted as well. But we have to wait and watch how things unfold,” Mohit Agarwal, director of Asian Tea & Exports Ltd, said.

Figures accessed from the Tea Board pegged total export at 121.48 million kg in January-June, up by 22.8 per cent from 98.87 mkg in the same period of 2023. Four countries/regions that showed major gains are CIS (former Soviet Union), Iraq, Iran and UAE.

Iran’s export had dwindled to 5.92 mkg in 2023 from a high of 54.45 mkg in 2019 after the unravelling of the rupee-rial trade. However, Iran appears to have resumed buying in 2024 as exports reached 4.91 mkg by June alone.

“The efforts of Indian exporters and their risk-taking abilities had led to major inroads to Iraq and regained ground in Iran, despite absence of any promotion of Indian teas. We would have ended the year with big positives but now we have to see how it goes,” Anshuman Kanoria, chairman of Indian Tea Exporters Association, said.

Buoyancy in export coupled with crop loss due to extreme weather events augured well for tea prices. Figures from Calcutta Tea Traders Association showed north Indian tea prices have risen by 17 per cent on average so far over the same period of 2023.

Hemant Bangur, chairman of Indian Tea Association, argued that tea consumption in the Arab world is unlikely to go down even if the conflict widens. “It is the trade channel which may be impacted, which has not happened as of now. We have to wait and watch,” he said.