The Sri Lankan crisis is making Indian exporters uneasy. But there is also a silver lining

The combined MD Data Group, was relieved that they received a call to get out of Sri Lanka market a few months ago. The company based in Jaipur is used to export Mustard oil cakes to the island country but now it has transferred its focus to other markets. “It is a very risky situation. Indian banks do not receive credit letters from Bank Sri Lanka. Exporters do not work on large margins and trapped payments. We estimate how things can develop in the long run and stop our exports to the country, “He said.

The quantity of exporting groups to Sri Lanka (SL) is usually 500 tons a month, which has now been directed to countries such as Korea and Malaysia.

While data can change tracks and exit since the beginning, not all exporters to the island country 22 million people have been able to complete operations easily. Those who get their share of business are greater than the worst Sri Lanka. Payments have stopped, making exporters worry amidst the acute economic and political crisis rooted in natural disasters, terror attacks and mismanagement of the government.

This is bad news for exporters from India. According to the Indian High Commission in Sri Lanka, India is a major trading partner and also one of the biggest contributors to foreign investment directly in Sri Lanka. India is Sri Lanka’s second largest trading partner in 2020, with bilateral merchandise trade of $ 3.6 billion, according to the Commission. Exports from India to Sri Lanka are $ 5,020.11 million from April-February 2022 versus $ 3,948.23 million in FY21, according to the latest information available with the Ministry of Commerce. Import was $ 926.71 million in a period versus $ 642.94 million in FY21, he added.

While the crisis in SL has been in manufacture for several years, now encouraging the country to become an economic disposal hole. On Tuesday, the country failed to pay $ 51 billion in debt after running out of foreign exchange for import. There are shortages of fuel, food and medicine, which leads to street protests. This has made an alert exporters of sending goods to the island country.

However, the situation presents exporters and Indian service providers the opportunity to expand their business. Vicky Bahl, partner, Grant Thornton Bharat, said exporter must take advantage of the current situation. “Problems related to payments will be temporary, but this will provide way on a more stable way to do business for a certain period of time. There will be tension in working capital for some time, but the way they take advantage of the opportunity to determine how sustainable they can grow Their business in the long run. “Exporters must focus on the future and take products to other markets, including those who import from Sri Lanka, said Bahl, adding that the crisis gave Indian players the opportunity to create a new fortress.