Price happens to be the single-most deciding factor towards greater exports to the Russian Federation. Says a top industry official, Russia needs cheaper teas, and Indian tea prices cannot go below a certain limit.

For Russia, which has an estimated market of 150 million kg, Indian teas have always been a favourite -- the closest competitor happens to be Sri Lanka whose teas are much comparable with the south Indian teas.

But it is here that India has an advantage over the island country. Sri Lanka can sell its teas in Russia only in dollars, whereas Indian teas are routed through the debt repayment scheme.

"The target of exporting 100 million kg is not an impossible target, but what needs to be seen is that this target does not undergo any fluctuations. For Russia, bearing with itseconomic crisis has to shell out 80 roubles for a kg of tea which was just about 30 roubles up to July this year", said an industry analyst.

Trade circles said that it would not be before February next year when the Russian government would give clearances to its importers for opening letters of credit towards Indian exports.

It may be noted that the Russian tea market is catered to by imports. In 1997, Russia imported a total of 158 million kg, of which the highest proportion came from India at 90 million kg. This was followed by Sri Lanka at 35 million kg, China and Indonesia at six million kg each.

The main companies which operate in Russia include May Company which controls almost 20 per cent of the total sales. The other large tea companies include Dilmah, Ormi Trade, Grand and Nikitin.

The revival of the administrative machinery in Russia is seen as a positive sign by most exporters who were beginning to feel that the Russian slump was having its repercussions on Indian exports in general.

Forexample, wholesalers purchasing tea in bulk were not able to release their products to the retail trade because banks were unable to release any funds.

It may be noted that prices of teas at south Indian auctions have been witnessing lower levels over the last few months primarily due to a lack of Russian enquiries. It has been estimated that prices have fallen by almost Rs 10 over the last two months, a trend that was not noticeable earlier.

Industry circles said that the Russian buyers were operating between Rs 55 to Rs 65 at the south Indian auctions and Rs 70-72 in the north Indian auctions this year.

According to estimates, Indian tea exports to Russia up to August stood at 59 milion kg compared to 54 million kg in the corresponding period the previous year.

The tea industry initially predicted exports to the Russian Federation in 1998 to the tune of 80 million kg -- 10 million kg less from what was attained in 1997. The industry, analysing a rising trend in November this year has revised it to85 million kg late last month.

Industry analysts said that although there has of late been some Russian enquiry, it remains to be seen whether exports will pick up to the last year's level.