As Sri Lanka’s economy spirals into crisis, here’s a snapshot of the export-import situation
India Today
With the prevalent situation, India’s exporters are rethinking plans to send shipments to Sri Lanka as state-run companies have run out of money and private buyers have cancelled orders. Without assurances from the government, exports to the island nation are set to shrink from April, analysts say.
India's southern neighbour, Sri Lanka, is struggling to stay afloat amid the deepening economic crisis with the island nation on the brink of bankruptcy, with nearly USD 7 billion of its total USD 25 billion in foreign debt due for repayment this year.
A severe shortage of foreign exchange means the country lacks the money to buy imported goods. People have endured months of shortages of essentials like food, cooking gas, fuel, and medicine, and lining up for hours to buy the very limited stocks available.
With the prevalent situation, India’s exporters are rethinking plans to send shipments to Sri Lanka as state-run companies have run out of money and private buyers have cancelled orders. Without assurances from the government, exports to the island nation are set to shrink from April, analysts say.
During such situations, shipments with high freight-on-board value are the first to be hit. These are mostly products that get imported into the country.
As of now, import of vehicles, engineering goods such as iron and steel, heavy machinery, and electronics have begun to reduce as exporters are looking to renegotiate contracts or hold off on shipments coming to Sri Lanka.
Recently, the Export Credit Guarantee Corporation, which provides credit risk insurance and related services for exports, put Sri Lanka in the Restricted Cover Category-I. This has further complicated and made exporters wary of shipping goods into Sri Lanka.
India is one of the biggest business partners for Sri Lanka, and it also carries out some very significant pieces of business with the island nation. The bilateral trade between India with Sri Lanka stood at $5.9 billion during 2021-22, rising from $4.1 billion in 2020-21.
