How Product Standards Influence Tea Exports? Empirical Evidence from India

Abstract

India has witnessed a declining trend in tea exports in the recent period, which can partly be attributed to competition from exporters (e.g., Kenya and Sri Lanka) enjoying price advantages over the Indian varieties. However, although after the inception of the World Trade Organization (WTO) in 1995, the tariff barriers on Indian tea exports have come down across developed partners, the incidence of non-tariff barriers (NTBs) has emerged as a challenge in many destinations, with a possible dampening effect on exports. The present analysis attempts to analyse whether the imposition of product standard related measures, particularly sanitary and phytosanitary (SPS) and Technical Barriers to Trade (TBT) interventions, may have negatively influenced Indian tea exports over the period 1996–2021. Rather than considering the mere presence of SPS–TBT standards in major partner countries, their potential impacts on Indian tea exports have been determined by analysing the stringency levels of the corresponding notifications submitted to the WTO. The constructed stringency patterns are then incorporated into the Poisson pseudo maximum likelihood estimation models. The observed negative influence of standard-related measures in partner countries on Indian tea exports calls for policy interventions to enable the sector to better ensure compliance in the future.