Iran has been for long one of the top trade partners of Sri Lanka and the Southeast Asian country is counting on Iran for maintaining its share of the tea market in the Middle East.

However, since the imposition of western sanctions against Iran - which notably impeded the two-way trade - tea exports to Iran fell drastically compared to the pre-sanctions era.

After the implementation of the nuclear deal between Iran and world powers in January 2016 which lifted most of the sanctions on Iran, Sri Lankan tea exports received a significant boost, rising to $154 million with a year-on-year growth of 16.8 percent. 

In 2016, Iran overtook Russia as the top export destination for Sri Lankan tea, according to Sri Lanka Chamber of Commerce. 
With Iran coming back to the world trade scene, Sri Lanka is once again eager to regain its share of the Iranian market as one of the biggest destinations for Ceylon tea. 

In an exclusive interview with the Tehran Times, Sri Lanka’s Minister of Plantation Industries Navin Dissanayake noted that there are still unresolved banking issues in trade with Iran and the Sri Lankan government has been working on these issues very strongly to get the payment problems sorted out. 

“Although the U.S. has imposed some sanctions on Iran but tea belongs to food products category and therefore it technically should not be sanctioned, so based on this fact we hope in near future we will be able to sort out some solution for this issue,” Dissanayake said.

According to the minister, for the time being the payments between the two countries go through a third party bank which is acceptable for both sides.

Meanwhile, the head of Sri Lanka Tea Board Rohan Pethiyagoda told the Tehran Times that if the U.S. sanctions continue, the two countries will change their channel of trade to Euro and they will not conduct transactions in U.S. dollar anymore.

“In that case, the regular banking channels will take place through Euro rather than U.S. Dollar, and that is just about to get started,” he noted.

Sri Lanka is currently exporting 29 million kilograms of tea to Iran per annum and the Middle Eastern country is among the top three importers of Ceylon tea in the world.

Sri Lanka has already invited an Iranian delegation to visit the country as the two sides are looking forward for technical cooperation in the tea industry, the minister said.

“Iran can use Sri Lanka’s years of experience in tea plantation and the country can help Iran with the technical aspects of tea industry….Sri Lanka Tea Research Institute, on the other hand, needs some funding to expand its research horizons, and Iran could contribute in this regard by establishing private, public partnership with TRI,” Dissanayake explained.
In August, Iran’s Parliament Speaker Ali Larijani met with his Sri Lankan counterpart Karu Jayasuriya in Tehran. During the meeting, the Iranian official asserted that Iran sought to enhance trade ties with Sri Lanka. “The two countries have a great potential for strengthening relations,” he said.

Larijani called relations between the two countries constructive and progressive, adding that the visit could pave the way for further cooperation.

Referring to the exports of tea from Sri Lanka to Iran, Larijani said that the country would invest to develop technologies to cultivate tea in Iran.

Karu Jayasuriya, for his part, pointed to positive and growing relations between Iran and Sri Lanka, and said that the two nations have ever since maintained warm and friendly relations.

MG