India’s trade with Sri Lanka at a standstill

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India’s commerce with Sri Lanka has almost completely ceased as a result of the upheaval on the island, which has exporters concerned about their payments.

Exporters informed FE that due to Sri Lanka’s worsening political and economic issues, commerce between the two countries has nearly completely ceased this month.

The current political and economic unrest in Sri Lanka has had an impact on Indian commerce as well. The island country provides a significant market for agricultural products, including sugar, grapes, and onions. Since the start of the economic crisis, the majority of exporters have put commerce on hold, despite some complaining that their payments are frozen.

“Both our exports and imports have completely ceased. Because of the political instability and payment concerns, exporters are very cautious,” Khalid Khan, Vice-Chairman of the Federation of Indian Export Organizations (FIEO), stated. However, he expressed optimism that things would get better once Sri Lanka’s new administration takes control.

For the fiscal years 2021–2022, India’s exports to the island country were a robust $5,208.3 million, an increase of 65% over the previous year. The main imports to Sri Lanka include engineering items, skimmed milk powder, sugar, onions, and grapes. Indian exporters typically send out their consignments from ports on vessels due to the simple connectivity across the sea.

Exporters referred to Sri Lanka as an extension of the Kolkata market when describing it as a significant market for Indian sugar. 90% of Sri Lanka’s monthly consumption of 40,000–50,000 tonnes of sugar comes from India.

Some exporters predicted that supplies to Sri Lanka would decline by 30% in FY23 from a record $5.7 billion in the previous year. This is because the government there has resorted to importing limits, restricting their purchases to just necessities, and even those purchases are made in small quantities, utilising the credit lines provided to Colombo by New Delhi.

According to a senior Commerce Ministry official, given the low amount of bilateral trade, the crisis is unlikely to have a big effect on India.

However, Indian exporters have ceased sending goods to the nation during the past three months, particularly after the economic crisis began. Rahil Sheikh, Managing Director of MEIR Commodities, stated that there isn’t much surplus sugar remaining to export for the current season.

(Invesntiva)