How feasible is a land route for N. Indian tea exports to Pakistan?

A high-level Pakistani tea delegation recently visited India. At Kolkata, exporters of north Indian teas, during an interaction with the delegation members, explored the scope to boost shipments of the produce of Darjeeling, Dooars, Terai and Assam to that country.

Pakistan has been importing 24 million kg of tea annually from India for the last couple of years, the bulk of it from South India. There may be several reasons why Pakistan prefers south Indian teas to north Indian varieties, but one critical reason, transport cost, does not get due attention.

Kochi port is much closer to Karachi port than Kolkata or Haldia port. Also, there is no direct shipping service between Kolkata or Haldia and Karachi. None of the national carriers of the two countries call at each other's ports.

“There is no restriction as such on our national carriers to call at each other's ports following the signing of the bilateral shipping protocol between the two countries a few years ago, but where is the cargo volume to warrant such services on regular basis?” asks Mr S. Hajara, Chairman and Managing Director, Shipping Corporation of India.

No wonder, north Indian exporters fall back upon feeder vessels shuttling between Kolkata or Haldia and a hub port, generally Colombo, offering transshipment facility to connect mainline vessels calling at a Pakistani port, particularly Karachi. The whole exercise is time-consuming, hence costly.

Border route not so easy

A leading exporter says: “It takes nearly a month for a consignment of Assam tea to reach Karachi.” The delay adds to the cost. As it is, north Indian teas are costly, rendered costlier by the additional transport cost. The transit time between Mombasa (Kenya) and Karachi ports, on the other hand, is much shorter. Many north Indian exporters, therefore, are keen on rail or road transport through the Attari-Wagah border.

It will not take more than 10-12 days for north Indian tea consignments to reach Lahore through the Attari-Wagah border, it is believed. Once the route opens up, it should be possible to export not only bulk teas but also packet teas having good market across the border, it is pointed out.

But transporting teas through the Attari-Wagah border is beset with problems. As late as March 20, the Government of Pakistan issued a notification giving out the list of items to be allowed into Pakistan from India through the border. There are 137 items — mostly fresh vegetables, cotton yarn, etc, — tea is not one of them. Which means north Indian tea exporters have to first lobby with the Union Government for taking up with the Pakistan Government the issue of including tea in the approved list.

Next, road and rail transport via the border is not as simple as it is often made out to be. The advantage of road transport is that it is a door-to-door service. But the cost of such a service, it is said, is not cheap and, more important, the route to be followed may not be safe and secure.

Assam tea, if transported by road to Amritsar, has to pass through several States, not all of which are particularly known for good law and order situation. Pilferage, political disturbance, natural calamities and wildcat localised bandhs on trivial issues and various other factors might stall truck movement. Insurance cost therefore will be high, it is thought.

Container problems

The Railways, enquiries reveal, are reluctant even to discuss the subject unless approved by the Union Government. Once the Government announces its approval of rail movement of tea from Assam and North Bengal to Amritsar and beyond, only then will the Railways start working on details like the demarcation of the path, freight, rolling stock, etc. Ideally, tea should move in containers, but that is not possible now.

As Mr Anil Gupta, Managing Director, Container Corporation of India, explains, a separate protocol has to be signed first between the two countries to facilitate container movement by rail. Right now, there is no such protocol agreement with Pakistan, not even with Bangladesh; it exists only with Nepal. The rail service between Munabao (Rajasthan) and Kokhrapar (Sind, Pakistan), restored in 2006 after a gap of 30 years, is favoured by neither Pakistani importers nor Indian exporters, as the route cuts through desert areas on both sides of the border with huge logistical problems.

Finally comes the documentation. For seamless movement of tea by rail or road from Assam to Lahore, a combined transport document has to be prepared such that the document is negotiable at all checkpoints. Interestingly, at present, large quantities of teas travel entirely through the unofficial channel to Pakistan. As it has been acknowledged officially, Pakistan now imports 120 million kg but consumes more than 220 million kg annually. Which means the size of tea trade through the unofficial channel will be about 100 million kg annually, and some portion of it may be routed through the Attari-Wagah border also. The disproportionately high per-person consumption of tea in the border areas of India's Punjab vis-à-vis the rest of the country only confirms it.

Mfn optimists

Diehard optimists, mostly among the north Indian exporters, look forward to the MFN (most favoured nation) status rumoured to be granted by Pakistan to India by the end of this year. Once the status is bestowed on India, it is believed that there will be freer trade also covering tea between the two countries by land route. The optimism is based on several positive developments recently, such as commissioning of integrated check-posts on the Attari-Wagah border, easier visa norms, frequent visits of high-powered delegations in both the countries: all suggesting that Pakistan is the flavour of the season.

The optimists seem convinced that once regular trade picks up through the land route, the volume of unofficial trade will be curbed and, more important, it will be possible to give Kenyan exporters a run for their money. After all, domestic transport in Kenya, that is, movement of teas from the gardens to Mombasa port, leaves much to be desired, and also, Mombasa does not have state-of-the-art cargo-handling facilities, it is pointed out. In other words, the actual cost differential will not be much.

>santanu@thehindu.co.in