Given that India happens to be the biggest export destination for Nepal tea, the concern in Kathmandu and beyond was understandable. GOI had been facing a long standing demand from its domestic tea industry to curb the volumes of Nepalese varieties of tea entering India. These were often sold off as Indian products, involving price manipulation and other foul trade practices. Much of Nepal's tea export so other countries too had to pass through India.

The Tea Board, the Tea association and other organisations alleged that despite repeated requests, a section of Nepalese producers were not doing enough to stop trade malpractices that involved selling off essentially cheaper Nepalese varieties as Indian products. This hurt the prospects and the general image of the bigger India-based industry.

GOI therefore introduced a new system of testing the quality of Nepalese varieties meant to be sold in India at a Kolkata lab before allowing a sale. Samples of Nepalese tea would be taken from the Indo Nepal border all the way to West Bengal and the results would be conveyed to the exporters.

The process, according to anxious Nepalese producers, would take an average 15 day period, the kind of delay that was simply acceptable. They frantically pressed Kathmandu-based authorities to take up the issue with GOI.

Observers see the Indian decision to do away with the quality testing for Nepalese varieties to be imported into India as a temporary measure to allow some relief for Nepal, more as a diplomatic move than anything else. But that has not stopped the bigger Indian industry from immediately renewing its earlier campaign — it leaves the bigger industry in a vulnerable position that cannot be allowed to continue indefinitely.

Nepalese authorities too, appreciate the complex nature of the problem. There is much discussion on how to reduce Nepal's near total dependence in India for its exports, in terms of sheer quantity, if not quality. Nepal exports its tea to the UK, Germany, Turkey, Iraq, Russia and the UAE among others. But the quantities involved are much smaller not to mention the built-in advantages of the vast Indian market, its proximity to Nepal and other factors. There are no detailed plans as yet to try to replace India as the leading buyer, although proposals to increase sales to Pakistan and Bangladesh are heard from time to time.

For the record over 55,000 people depend on the production of tea in Nepal, plantations numbering over 160, and farmers, over 14,000. Spread over 21,000 hectares, the industry earned over Rs 4 billion (Nepalese currency) in exports last year with India accounting for around Rs 2.30 billion. The almost total halt in the supply of tea to India as a result of the mandatory testing arrangements had already cost the Nepalese producers a hefty loss of around 20% in earnings, according to Nepalese authorities. (IPA Service)