Pakistan Emerges as Prime Tea Import Market


A dozen years ago political analysts and economists concluded that loosening trade restrictions between Pakistan and India would prove beneficial to both countries.

At the time Pakistan was the second largest tea importer in the world at 150 million kgs but less than 1.5 percent of that tea traveled over the border between these two nations.

“The cost of not trading with India is high as Indian tea is competitively priced in the international market and is also perceived as being of high quality,” according to the August 2001 issue of Pakistan’s respected World Trade Review. Until 1998 Pakistan permitted the import of fewer than 600 types of products from India.

In the decade since, World Trade Organization (WHO) membership and even Most Favored Nation (MFN) status has not fully restored the lucrative and mutually beneficial trade in tea that preceded Pakistan’s war of independence.

But declines in production of Kenyan tea may finally thaw the freeze.

Last year Pakistan imported 20 million kgs of Indian tea, according to the Indian Tea Association.

“Pakistan has emerged as a leading market for Indian black tea, leaving behind traditional destinations like Russia, the UK, USA and Germany," according to Indian Tea Association Joint Secretary S Patra. In a report published in The Economic Times, Patra said export of Indian tea has grown twenty-fold from one million metric tons 10 years ago. Kenya previously supplied 65 percent of Pakistani tea. India currently supplies about 15 percent.

Soumitro Banerjee, a senior executive of Kolkata-based Goodricke Group Limited, told the Economic Times that easing of restrictions in Pakistan due to recent efforts by governments of the two countries have facilitated the smoother entry of Indian tea into Pakistani markets, particularly in Karachi.
This month business leaders once again called for lower trade barriers, the elimination of tariffs and recognition that India is a “routine trade partner.”

Trade relations are improving. A delagation from the Pakistani Tea Association will tour India in April. This month, in a report published in the India News Post, the president of the Lahore Chamber of Commerce and Industry, Irfan Qaiser Sheikh, called for “a new trade regime” during a visit to India. Trade in textiles, fabrics, gems and jewelry as well as commercial banking and services face unnecessary restrictions.

He called for better mobile connectivity to improve communication for business and trade, relay of television channels and allowing Pakistani programs to be telecast in India, opening bank branches on reciprocal basis and other topics of discussion among business leaders of the two countries at the PHD Chamber event.

Business executives on either side of the border hope to double their bilateral trade to $6 billion in the next three years from the current $2.7 billion.

Pakistan's major exports to India include vegetables, fruits and nuts, cotton, mineral fuels, salt, lime and cement, but the value of these items contribute to a miniscule share of India's total imports.

Sources: India News Post, The Economic Times and World Trade Review.