India's Tea Export Potential: Stirring up Global Trade Opportunities

Abstract

India's tea industry, a significant player in the global market, is poised for growth amidst evolving trade dynamics. This paper explores India's tea export potential by examining production, export trends, and competitiveness on a global scale. In 2022, global tea production reached 6,422 million kilograms, with China and India being the largest producers, while Kenya led in exports. India, the second-largest producer and fourth-largest exporter, shipped tea worth approximately USD 706 million, primarily to the UAE, Iraq, Russia, the USA, and the UK. Methodologically, this study utilizes a gravity model with PPML estimation to analyze India's tea exports to 173 trading partners from 2004 to 2021, addressing zero trade observations. Revealed Comparative Advantage (RCA) and Revealed Symmetric Comparative Advantage (RSCA) indices are employed to assess competitiveness, revealing an upward trend in India's comparative advantage. Transitional probabilities provide insights into shifting trade patterns, indicating significant market instability in countries like Germany and the UK. The analysis also includes estimation results highlighting the impact of GDP, geographical distance, population, and other factors on India's tea exports. Results demonstrate that India has considerable potential to expand tea exports to 118 countries, with high prospects in Uzbekistan, the USA, France, Hong Kong, and Italy. Current export strategies  focus on saturated markets, underscoring the need to explore untapped regions to maximize trade opportunities. This study highlights the necessity for India to diversify its export destinations to enhance its global trade footprint and leverage its growing competitiveness in the tea sector.