Darjeeling unrest: Tea exports to take a Rs 100-150-cr hit, says Icra

Tea exports from Darjeeling in West Bengal will be impacted by Rs 100-150 crore, which is likely to be significantly higher if the political unrest continues for a longer period, ICRA said in a report.

The impact of the current situation on revenue is estimated to be in the region of Rs 100-150 crore at present, rating agency ICRA said.

However, a prolonged political unrest might result in a significant impact, it added.

Leaf plucking and processing activities have been suspended since the second week of June, following political strife in the region.

The second flush tea variety of Darjeeling have been of high quality and are almost entirely exported, it said.

While Darjeeling tea is a niche product catering to specific markets, the reduced availability of second flush Darjeeling tea is likely to lead to some substitution of such tea with tea from different geographies, ICRA pointed out.

Darjeeling has five flushes through the year.

The second flush, from late May till early June-early July, produces a very premium quality of tea and fetches high prices in the export markets, the rating agency said.

This contributes to around 20-25 per cent of the total tea produced in Darjeeling, but the revenue contribution is much higher as it is of premium quality, ICRA said.

"For Darjeeling teas, a plucking cycle of 5-6 days is followed. Timely plucking of fine leaves contributes to the overall quality of the tea produced during this period. Thus, the lack of plucking activity over the past 20 days is expected to have an impact on the production volume as well as the tea quality, even when operations re-start.

"This in turn is likely to impact the export performance of Darjeeling teas," ICRA vice president and sector-head, corporate sector ratings, Kaushik Das said.

Further, ICRA said, the impact of the loss of export volumes for Darjeeling tea on the domestic supply-demand situation is expected to be limited as it has low domestic demand.

In the current year, weather patterns have been favourable, leading to good quality and increased production in the first flush, it added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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