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Brexit impact: Indian tea export realisation from UK to fall 7-8%

Date 27-Jun-2016
Subject Brexit impact: Indian tea export realisation from UK to fall 7-8%

NEW DELHI: Indian tea is likely to be impacted by currency volatility in the short-run, following Britain's exit from the European Union, although the demand-supply situation is poised to remain steady.

Over the years, Indian tea exporters to UK such as McLeod Russel, Goodricke and others were able to convert at least 50 per cent of their trade to the US dollar from the British pound (GBP) exchange. Yet, following the exit, an immediate impact of 7-8 per cent on price realisation is imminent. However, the concern has now become graver, as it is not just the British pound which is going down, but Brexit repercussions have started reflecting on the US Dollar to the Indian Rupee exchange rate as well. The Indian Tea Association (ITA), which feels that the forex implications can be temporary, is of the view that the contracts between British buyers and Indian tea sellers that are already existing will not be affected, but those that need renewal will see a rise in prices.

According to Azam Monem, Vice President of ITA, there is a possibility that tea prices will surge in the British market but it won’t reflect positively on Indian exporters’ balance sheets immediately on account of currency volatility. However, Germany, which buys tea from India and exports it to UK after blending needs to be monitored as UK starts narrowing down on the Brexit date.

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