Israel-Iran Conflict The Potential Killer Of Assam's Orthodox Tea Exports

The conflict between Iran and Israel's impact on global business is not limited to oil distribution crisis and higher brent crude oil prices as it paints a glim picture for Assam's tea exports to and especially to Iran, one of its consistent and largest markets.

The state's tea economy is expected to face the brunt of the present tensions in West Asia as a result of disruption in trade routes amid overall uncertainty, given its exports 140 million kilograms of tea globally, which is half of India's total tea exports.

Iran is a significant destination for Assam’s orthodox tea, accounting for nearly 25 million kilograms, close to 30 per cent of the state’s annual orthodox tea production of 85 million kilograms.

However, in the wake of the Iran-Israel conflict, this critical export channel has entered uncertain waters. According to Prabhat Bezbaruah, former chairman of the Indian Tea Board and a leading voice in the industry: “With the present situation in the Middle East, this market is now at serious risk, "citing an ANI report.

Israel-Iran Conflict's Direct Effect On Orthodox Tea Exports

In 2024, India exported 35 million kg tea to Iran, meanwhile, the export quantity to Iraq was 40.47 million kg. The export in Kolkata auction slipped by 59 per cent, while in the same time, the export at the Guwahati Tea Auction centre came down by 41 per cent.

Prices of orthodox tea to Iran at Kolkata Auction was 307.34 kilogram and at Guwahati was 269.53 rupees per kilogram. Post-war, the prices came down by 24 per cent at the Guwahati auction itself.

“It’s premature to predict. The export to Iran is a process which involves the government. The registration works needs to be done and then comes the payment process. Registration is time-bound and there is a huge amount as outstanding payment now. The ships have been docked for the past one week," said Anshuman Kanoria, president, All India Tea Exporters Association.

Are Delays Expected In Tea Dispatches To Iran?

The tea exports to Iran function under a centre-controlled system which has time-bound registration of contracts followed by delayed payment schedules.

While the tea for this season has been shipped or awaits dispatch within a week, delays are expected. Outstanding payments remain a concern for exporters, increasing the financial burden on producers.

Current orders are still in hand, and while shipments have not come to an overall halt, uncertainty looms large over future contracts.

The silver lining in the crisis is that demand from Iran remains strong, and outlook for future orders is positive—if political stability returns soon. However, with ongoing instability, exporters are wary of risks. Prices have already taken a major hit, falling 10 to 20 per cent across different grades, with premium orthodox teas being the hardest hit.

Bezbaruah said, “The price of orthodox tea, which had climbed to Rs 50–60 per kg, has already fallen by Rs 100 in some segments. This kind of decline is unsustainable."

Assam orthodox tea is primarily auctioned at the Kolkata Tea Auction which also deals with orthodox tea from down South.

The Middle East war’s effect is spilling over into broader markets. Iraq, which has emerged as the major secondary destination for Iran-specific teas these days, is absorbing some of the volumes meant for Iran. However, medium-quality teas have been most affected, with a noticeable dip in sales and product coming back unsold into the domestic market.

What's The Buffer To Stabilize Tea Export Demand? 

While orthodox teas face pressure of both geopolitical and economic factors, dust teas—used mainly for tea bags—have fetched record prices this season. This is largely due to 100 per cent compliance with EU standards for pesticide and Maximum Residue Limits (MRL), a longstanding issue for many tea-producing regions. The focus on diversified channels and strict compliance is seen as a potential buffer against declining demand in volatile markets.

Factors Beyond West Asia Conflict Affecting Tea Exports

Geopolitics is only one layer of Assam tea’s complex crisis. The industry is grappling with climate change, where June temperatures have exceeded 38°C—well beyond the ideal 35°C—and erratic rainfall is disrupting the crop cycle. Also, operational costs remain high, adding to the woes of the industry.