India-Russia Trade Ties Could Boost Orthodox Tea Exports Through Rupee-Rouble Mechanism

New Delhi, Sept 9 (KNN) India’s deepening energy and trade ties with Russia could indirectly boost orthodox tea exports as improved payment mechanisms and accumulated rupee liquidity create greater scope for Russian buyers to source Indian goods. 

Russia remains a major tea market, with premium orthodox varieties showing greater resilience. In FY26, India exported 31.32 million kg of tea to Russia, making it the third-largest destination by volume and accounting for around 6.6 percent of total tea-export value. 

However, exports fell 23 percent to 20.84 million kg during January-August 2025 from 26.92 million kg a year earlier, reported Businessline.

Rupee-Rouble Trade Mechanism Supports Exports

Anil George Joseph, President, Tea Trade Association of Cochin, said orthodox tea has performed considerably better than the overall Russian import market. 

India-Russia trade, now heavily skewed towards Russia due to India’s increased crude oil purchases, reached around USD 70 billion in 2024, while Indian exports remained relatively small.

Joseph said accumulated rupee liquidity in Russia had historically created payment challenges, but these have eased significantly. 

Around 96 percent of bilateral trade is now reportedly settled through rupee-rouble mechanisms, potentially making it easier for Russian importers to source Indian goods and supporting tea exports amid the large trade imbalance.

Premium Orthodox Tea Gains Ground

N Lakshmanan Chettiar of Golden Hill Estates said Russian buyers are purchasing significant quantities of South Indian orthodox tea and paying a premium for quality. 

India’s tea exports rose 5.45 percent to 271.93 million kg in FY26, while average realisation increased to Rs 307.04 per kg. However, exports fell 16.11 percent to 128.56 million kg during January-July 2026, even as realisation rose 2.76 percent to Rs 304.04 per kg.

Joseph said orthodox tea continues to outperform commodity CTC grades, with strong buying interest at Kochi auctions. Around 95 percent of orthodox offerings were recently sold, reflecting sustained demand for quality varieties.

Demand Outlook Mixed

Dipak Shah, Chairman, South India Tea Exporters Association, said Russia remains a major buyer of orthodox tea, with the outlook dependent on market fundamentals and logistics, particularly during the winter months. Geopolitical uncertainty could also prompt buyers to maintain higher stocks.

He noted that shifting consumption towards packaged tea and tea bags could support demand for CTC small-leaf varieties over the longer term. However, prices of good-made-leaf orthodox tea have risen over the past six months while remaining competitive with Sri Lankan varieties.

(KNN Bureau)