CALCUTTA, 4 September 2003 — India’s tea exports will fall this year because of the war in Iraq, which until the war took in nearly a quarter of India’s tea exports, a top trade official said yesterday. India in 2002 sold 43 million kilograms (94.6 million pounds) of tea to Iraq through the UN-supervised “oil-for-food” program, accounting for more than 22 percent of India’s 193 million kilograms exported worldwide, according to the government-affiliated Indian Tea Board.

But exports to Iraq were suspended for two months during the US-led war that toppled Saddam Hussein and have been slow to rebound. “Unfortunately, last year’s export figure of 193 million kilograms could not be repeated this time as there has been no export of Indian tea to Iraq between April and May,” Tea Board chairman Naba Kumar Das told reporters after a tea industry meeting in Calcutta.

“Iraq is a major market for Indian tea, but tea is now not a priority item in the war-ravaged country,” he said. Das added, however, that the Indian industry was seeing increased interest in other parts of the world, particularly Russia.

Meanwhile, a top Finance Ministry official said in New Delhi yesterday that foreign investment in India in the July quarter more than halved from a year earlier to $529 million. India’s Chief Economic Adviser Ashok Lahiri told reporters it was difficult to pin the slide on any particular factor, but added sometimes there was a lag between a pick-up in the economy and in investments.

“I am not getting any sleepless nights yet,” he said, adding there were signs of a rise in the inflow of foreign investments from July. He forecast investments would start pouring in again in the coming months with a rise in equity markets and healthy monsoons boosting overall growth in the economy.

In the financial year to March 2003, a crippling drought coupled with a global economic slowdown pulled down economic growth to 4.4 percent — one of the lowest levels since India launched economic reforms in early 1990s. Lahiri admitted there was work to be done to increase India’s attractiveness to foreign investors.

Another official said that India will allow foreign pension funds to invest here, but is yet to decide on the extent of foreign equity to be allowed in their local subsidiaries. “The government of India has given in-principal clearance and foreign pension funds will be encouraged in a big way,” U.K. Sinha, joint secretary capital markets, told reporters.