As the world's second largest importer of tea, Pakistan has called for a single market in Asia for the optimal utilisation of resources and expansion of the trade in the sub-continent.

Though India is the world's largest producer of tea at about 830 million kg per annum (2002), the focus has been largely on the domestic market, which consumes about 685 million kg annually.

With the Indian tea sector facing multiple crises on account of higher production cost, lower prices and loss of two major exporting markets in Iraq and Russia this year, its stakeholders are desperately looking at the Pakistan market in the light of the thaw between the two neighbouring countries of late.

Pakistan Tea Association chairman Saeed Ahmed Khawaja told the Indian delegates at the 110th annual conference of the United Planters Association of South India in Coonoor on Saturday that both the countries should strive towards one market for Asia or the sub-continent to take advantage of the demand-supply scenario.

"For historical and political reasons, it is unfortunate that the Indian tea sector could not tap the Pakistan market during the last three decades. As developing countries, there is no reason why we cannot shed our differences and boost tea trade for mutual benefit," Khawaja stated.

In spite of Pakistan being a captive market with logistic and freight advantages across the western border, the share of Indian tea in its market was a mere 3.7 million kg out of a total 140 million kg last year. Total imports were valued at $250 million in 2002.

Pakistan generally meets its tea requirements from Sri Lanka and Africa, especially Kenya, overlooking the prospects of sourcing it from India due to strained political and economic ties.

"If Indian tea exporters have to make a dent in our market, they would have to focus on quality, variety, branding and multiple blends to match its peers from Kenya and other African countries, which have 90 per cent of the Pakistan market," Khawaja declared.

In Pakistan too, tea is facing tremendous competition from other beverages. "Hence it is crucial that our trade teams join hands to market the product and increase the consumption," he added.

Moreover, in the absence of a free trade agreement between the two countries, Pakistan levies high import tariff and other levies (55-60 per cent) on Indian tea, unlike on tea imports from Bangladesh, Sri Lanka and Nepal, which share the remaining 10 per cent of the Pakistan market.

"Going by the current consumption trends, Pakistan is all set to overtake the United Kingdom as the leading/largest tea importer by 2005.

With the exit of the Taliban regime in Afghanistan at the end of 2001, about 35 million kg of tea finds its way into the country from its western borders through grey channels. Similarly, large quantities of Indian tea (bulk and loose) are smuggled into Pakistan from across the porous border.

With a per capita consumption of 1kg per annum and twice of India, tea is still the most popular and cheapest beverage in the neighboring country, where about 70 per cent of the 140-million population dwell in the hinterland.

"Ironically, our government has been discouraging higher tea imports in the face of meager foreign exchange resources by asking the people to drink less tea and imposing heavy duties. None of these measures, however, have worked and tea continues to be in greater demand than before among the masses," Khawaja claimed.

According to Mohsin Mansoor Saify, a member of the visiting Pakistani delegation, Pakistan importers purchase Indian teas only when prices were lower and the product was available in variety or blends.

Capitalising on the improved relations between the two countries, the Indian commerce ministry is drawing up a plan of action to step up tea exports to Pakistan.

Additional commerce secretary L V Saptharishi told the 9-member Pakistan delegation to convince its government for lowering the tariff barriers on tea imports from India so that the trade could be doubled every year.

India Tea Board chairman N K Das disclosed that normalisation of relations between the countries would enable India to double its export to Pakistan to 6 million kg by the end of the current fiscal year (2003-04) from 3.5 million kg during the last fiscal (2002-03).