Brexit effect: Darjeeling tea producers put price talks on hold.

KOLKATA: Two key sectors of India -- the gems & jewellery and tea sectors -- are keenly awaiting the outcome of the June 23 EU referendum which will decide whether Britain will leave the EU or not. The impact of the currency volatility which may take place if Britain leaves the EU is a matter of concern to these sectors. The UK and Germany are the keybuyers of Darjeeling tea in the EU.

Some Darjeeling tea exporters have put their negotiations with UK buyers on hold till June 23. Fresh export negotiations will only begin next week when a clearer picture emerges. Ashok Lohia, one of the largest Darjeeling tea producers, said he would wait for the outcome of Brexit before initiating fresh negotiations with UK buyers. "Over the years, buyers have renegotiated the price and eventually brought it down even though the cost of production has gone up. So, I would prefer to wait and see the impact on the currency market if at all Brexit happens," he said. However, SS Bagaria, chairman, Darjeeling Tea Association, feels there is no point in holding back export orders.

"The forex earnings will either go up or go down if Brexit happens and we are now used to such currency fluctuations," he added. India's exports to the UK are valued at close to $11 billion annually and could take a hit if the pound falls. "If Brexit happens, then global volatility will be high which will not be good for the gem and jewellery exports from India.

The impact will be on all currencies. Exports to EU has slowed down and it may further get impacted," said Vipul Shah, former chairman, Gem & Jewellery Export Promotion Council. In the first two months of this fiscal, jewellery exports from India has gone up 32.44% in rupee terms to ` 38,606.51 crore compared to the same period last year. Analysts feel a decline in value of pound will impact UK's imports in the near term.

Source : economictimes.indiatimes.com