Tea exports from India are expected to increase this financial year, partially helped by the State Bank of India (SBI) allowing letters of credit (L/Cs) for sales to Iran.

India is also hoping to increase tea exports to Iraq, where Indian tea shippers have faced payment problems.

L/Cs for Iran

It has become easier for Indian exporters to send tea to Iran since the SBI allowed them to open L/Cs in euros.

Under pressure from Washington in late 2007, the SBI had stopped honouring Iranian L/Cs but subsequently changed its mind after pressure from an Iranian tea delegation and India's tea exporters.

Many banks worldwide hadrefused L/Cs from Iran following US sanctions on Iranian banks.

Other markets

Now it appears that Iraq is promising to resolve its payment crisis and bolstered by buoyant sales of tea to Iran, Pakistan and Egypt, the commerce ministry reckons India will export 200 million kilograms (kg) of tea in the 2009-10 financial year.

In 2008-09, India exported 195 million kg of tea. India's financial year runs from 1 April to 31 March.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.