Mumbai: Tea exports are likely to decline by 13 million kgs this year due to struggling global economic scenario, continuing high prices and recent decline in coffee prices, according to an industry study conducted by ICRA.
"Weaker world growth outlook, continuing high tea prices and recent sharp decline in coffee prices will result in marginal decline in India's tea exports from 193 million kgs to 180 million kgs in 2012," ICRA Management Consultancy (IMaCS) said.
This may result in decline in tea production this year and prices of the commodity may also become dearer, it said.
The faster-growing coffee market, which is adversely affecting tea consumption in Europe, is also one of the main reason affecting the exports, it said.
India's exports to Iran could also decline because of recent sanctions imposed by the US and EU, it pointed out.
Tea exporters to Iran may face payment and settlement problems, as the sanctions will curtail Iranian banks' access to international banking systems.
The fall in tea exports could also be attributed to the expected decline in domestic production during 2012 and increase in domestic consumption, the report stated.
India's tea production came down by 11.4 percent in the first five months of 2012.
Production has experienced a downward trend since October 2011, with especially severe declines in March-April 2012. While production in north India came down 12.2 percent during the first five month is this year, in South it was down by 10.2 percent.
Overall, domestic production is forecast to decline to around 950 million kg this year, the IMaCS report on Indian tea industry said.