Sri Lanka tea exports to Iran face high duties, packet ban

May 07, 2008 (LBO) – High import duty rates and a ban on packet tea imports by Iran is preventing Sri Lankan tea exporters from better penetrating a potentially lucrative market, industry officials said. Instead, a lot of the Sri Lankan tea that reaches Iran is smuggled over its borders, with Dubai as the region's transit point, they said.

The government missed an opportunity to discuss the matter with a delegation led by Iranian President Mahmoud Ahmadinejad to the island last month.

"Iran is a big market but high import duties and other indirect direct barriers are preventing exports," said an industry official. "So a lot of tea is smuggled through Dubai."

Sri Lanka Tea Board chairman Lalith Hettiarachchi confirmed that access remains difficult.

"The import duty on bulk tea is 30 percent, which is too high," he said. "Also, there's a ban on packeted tea exports.

Iran justified the high duty and import ban on the grounds that it wants to protect its own tea industry, he added.

Iran's tea trade also wants to do the packaging by itself.

An indirect barrier had been imposed with the Tea Association of Iran slapping what appears to be an unofficial 'registration' charge