• - Exports to Russia recorded as US $ 181.98 million in 2016 has increased to US $ 209.79 million in 2017, which shows a 15% increase compared to previous year.
• - Russia became the 12th leading buyer of Sri Lankan products absorbing 2% of Sri Lanka's total exports to the world in 2018.
• - Tea is the main export item to Russia which accounts 83% from total exports.
• - Other items that Sri Lanka exports to Russia are Apparel, Other vegetable textile fibers, Articles of apparel and clothing accessories (including gloves), New pneumatic tyres, of rubber, Headgear & parts thereof, etc.

• In November 2014, Russian government has granted approval for 19 fish exporting companies to export seafood products to Russia.

• In the 06 months of the year 2015, the total exports were 90.87 USD Mn and Imports were 131.45 USD Mn. The balance of trade was 222.32 USD Mn. Though the trade balance between Sri Lanka and Russia continuously favourable for Sri Lanka, in the first 06 months of 2015 only it was favourable for Russia after many years.

• Table 2: Sri Lanka’s Major Exports Products to Russia (2010 – 2014)

Value in US $ Mn.

Source: Sri Lanka Customs

Sri Lanka’s Major Exports Products to Russia ( 01st 06 months of 2015)

Tea Exports to Russia

• Tea is the main export item from Sri Lanka to Russia in which Sri Lanka exported 44,100.81 Mt of Ceylon tea valued at US $228.27 million in 2014 (Table 3).

• Russia has become the single largest buyer of tea from Sri Lanka for several years. Tea exports from Sri Lanka to Russia have declined from 54,211Mt in 2011 to 44,100.81Mt in 2014.

• Sri Lanka continues as the leading tea supplier to the Russian Federation with market share of 29.8% in 2014. However, the market share of Ceylon tea in the Russian market has declined from 31.5% in 2013 to 29.8% in 2014.

Table 3: Sri Lanka's Tea Exports to Russia

Source: Sri Lanka Customs

Table 4: Category wise tea exports to Russia from Sri Lanka in 2014

Source: ITC Trade Map

Category wise tea exports to Russia from Sri Lanka ( 01st 06 months of 2015)

• With the liberalization of the tea market in Russia during early 1990s, the Russian private sector commenced importation of predominately-packaged tea from Sri Lanka. Thus, Ceylon tea brands pre-packed at country of origin had the advantage of servicing Russian clientele.

• During that time bulk tea imports was allowed to be brought to Russia at zero duty while tea packets and tea bags were subject to a 10% import duty at the point of importation. However, in 1997, due to the pressure from domestic tea packers, the Russian Federation increased its import duty on pre-packed tea from 5% to 20% and imposed a minimum duty component of Euro 0.40 per Kg, while import duty on bulk tea maintained at 5%.

• Immediately after the WTO discussions, Russia reduced the duty on bulk tea imports to zero and import duty for packed and tea bags at 15% and 16.3% respectively.

• The unfair situation is that the duty being levied in the gross weight rather than the net weight and a minimum value of Euro 0.4 and Euro 0.8 per Kg being fixed for packets and tea bags, respectively.

• These reasons combined with the disadvantages in the utilization factor per container of pre-packed teas compared to bulk tea. As a result, during the last few years, Sri Lanka owned brands pre-packed at origin were fighting a loosing battle against Russian packers as well as Sri Lanka brands packed in Russia.

• Under the Generalized System of Preferences (GSP) of Russia, Sri Lanka enjoys 25% of tariff reduction from the current customs duty rate.

Readymade Garments

• Sri Lanka’s second largest export item to Russia is garments.

• The value of garment exports to Russia increased considerably from US $ 5.42 million in 2009 to US $ 24.84 million in 2014 recording a positive growth in garment exports from Sri Lanka to Russia

• The major suppliers of garments to Russia are Turkey, Italy, Austria, the UK, Germany and China. However, garment exports from developing countries face certain competition from the enterprises of the European Union, German, French and Dutch who have moved production to Russia and have established joint ventures.

• It is obvious that establishing joint ventures is the strategic means of penetrating the Russian Market on these items.

Seafood Products

• The Federal Service for Veterinary Surveillance of the Russian Federation has granted approval to 19 Sri Lankan Fish Exporting Companies to export their products to Russia with effect from 12.11.2014.

• This market access opportunity is a great achievement given the size of the Russian market and it is demand for Fish and Fisheries products.

• The opportunity to export Fish and Fish products to Russia would provide further benefit for Sri Lankan Exporters as their products would also enjoy market access to Belarus and Kazakhstan under the Russia-Belarus-Kazakhstan Common Customs Union.