"India and Sri Lanka together account for 40 percent of global production...with proper cooperation the two countries can continue to share 40 percent or more of the total global exports," Chrisantha Perera, chairman of Forbes & Walkers Tea Brokers (Pvt) Ltd, told Reuters in an interview.
India's tea trade has expressed concern over a government proposal to allow duty-free imports from Sri Lanka. They have said the imports would hit India's tea output and exports.
India currently imposes a 19 percent duty on tea imports from Sri Lanka.
"Admittedly, if the domestic demand is catered for by a further supply route such as Sri Lanka, prices in the Indian auction centers could decline," Perera said, adding however they would then reflect a more international price level.
"This fear is probably the reason that producer interests within India are keen on safeguarding Indian's domestic market to themselves by not permitting imported teas...," he added.
But Perera said if Sri Lankan teas were imported at competitive prices to meet India's growing domestic demand, it would free up Indian tea for exports.
India's domestic demand has been rising by almost five percent annually, eroding export availability.
"In 1977 India was by far the largest global tea exporter with a 28 percent market share. In 1987, India's market share had declined to 21 percent and in 1997 India accounted for only 17 percent of global exports," Perera said.
He said over the corresponding period Sri Lanka had maintained its market share at around 22 to 23 percent and was the largest global exporter in 1997.
"More importantly China has increased its market share from 10 percent in 1977 to 18 percent in 1997 and Kenya from nine percent to 17 percent," Perera said.
He said the building up of trading relationships in the industry will offer also enormous opportunities for joint ventures between Indian and Sri Lankan companies.
"Therefore, it is a win-win situation for both countries."
Perera however warned that proper procedures must be put in place by Sri Lanka and India to ensure that there will be no "dumping".
Sri Lanka in 1998 exported 271.8 million kg of tea, up 3.3 million kg or 1.2 percent from the previous year.
The Indian Tea Association has said that tea exports in 1998 were 205 million kg and the country was targeting 225 million this year.
((Colombo Newsroom (941) 434319, Fax (941) 338301/2, email: colombo.newsroomreuters.com))
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