Sri Lanka crisis hits India’s sugar and onion exports

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Sri Lanka crisis hits India's sugar and onion exports

The current economic situation and Sri Lanka’s political crisis also affected Indian trade. The island nation is a major destination for agricultural commodities such as sugar, grapes and onions.

Since the economic crisis erupted, most exporters have kept trade suspended, although some have complained that their payments are blocked.

India’s export bill to the island country for the 2021-22 financial year stood at $5,208.3 million – a 65% growth over the previous year. Engineering products, skimmed milk powder, sugar, onions and grapes are the main exports to Sri Lanka. Given the easy connectivity across the sea, Indian exporters typically ship their shipments from ports by ship.

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For Indian sugar, Sri Lanka was quite an important market, with exporters calling it an extension of the Kolkata market. Of the 40,000-50,000 tonnes of sugar that Sri Lanka consumes every month, 90% comes from India.

However, since the last three months, especially since the beginning of the economic crisis, Indian exporters have stopped their shipments to the country. Rahil Sheikh, managing director of MEIR commodities, said that for the current season there is almost no surplus sugar left to be exported.

“With the government limiting exporters, the chances of exporting for this season are slim,” he said.

Most of the credit line allowed by the Reserve Bank of India was used by Sri Lanka to import fuel and food.
Another commodity that has since stopped going to Sri Lanka is Indian onions. For the 2021-22 fiscal year, India exported 1.62 lakh tons of staple foods to Sri Lanka.

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Abhijit Bhasale, owner of Rainbow International – a major import-export company that deals in fruits and vegetables – said that exporters who have sent remittances to Sri Lanka have not yet received their payments.

“If we compare countries like Bangladesh and Sri Lanka, the former is a more important market for Indian onions than Sri Lanka,” he said.

Since the economic crisis broke out, Indian exporters have stopped sending onions to Sri Lanka, but as Bhasale said, some of the exporters who traded with the country have not yet received their payments.

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