India asks for a taste of Sri Lanka’s tea market

India has called for duty free access for its teas into Sri Lanka under the latest round of CEPA talks that concluded in end August. A weekly Asia Siyaka Commodities report said India is asking for duty free access for green and black teas in three kilos and larger pack sizes.

The Siyaka report said tea was among the 300 items on Indla’s list for duty concessions at the third round of technical level negotiations on the Comprehensive Economic Partnership Agreement (CEPA) with India in August.

Tea Board officials on Thursday said Sri Lanka had not decided on the issue yet.

Sri Lanka however could have to reciprocate India’s concessions on 15 million kilos of Ceylon teas given under the 1998 Free Trade Agreement.

Despite the quota Sri Lanka only exported some 170,000 kilos of tea in 2004, down from an estimated 900,000 kilos exported in the immediate aftermath of the FTA, tea industry officials said.

Industry officials claim that despite India’s 15 mn quota, restrictions on access ports and customs clearance delays made it difficult to export to the subcontinent market.

Sri Lanka meanwhile already buys some 2.5 mn kgs of speciality teas annually from India and carries no duty concessions.

Sri Lanka produces an average 300 million kilos of tea annually, with domestic market absorbing less than 30 million kilos.

Only an estimated 10 percent of the domestic teas is sold in branded form, with the rest sold as loos tea.

Siyaka sourced the information on the CEPA negotiations to the Ceylon Chamber of Commerce.

-LBO Newsdesk: lboemail@vanguardlk.com