Sri Lankan crisis hits India’s sugar and onion exports

Since the economic crisis has erupted, most exporters have kept trade suspended even though some have complained of their payment being stuck.

India’s export bill to the island nation for the financial year 2021-22 stood at a healthy $ 5,208.3 million – a 65 per cent year-on-year growth. Engineering goods, skimmed milk powder, sugar, onions, and grapes are the major exports to Sri Lanka. Given the easy connectivity through sea, Indian exporters normally send out their consignments from ports in vessels.

For Indian sugar, Sri Lanka was a fairly important market with exporters calling it an extension of the Kolkata market. Of the 40,000-50,000 tonnes of sugar which Sri Lanka consumes every month, 90 per cent is sourced from India.

However, since the last three months, especially since the economic crisis started, Indian exporters had stopped their shipment to the country. Rahil Sheikh, managing director of MEIR commodities, said that for the present season hardly any surplus sugar is left to be exported.

“With the government putting a cap on exporters, chances of exports for this season are slim,” he said.

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

Abhijit Bhasale, owner of Rainbow International – a leading export import firm dealing in fruits and vegetables – said exporters who had sent shipments to Sri Lanka are yet to receive 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 has broken out, Indian exporters have stopped sending onions to Sri Lanka but as Bhasale said some of the exporters, who had traded with the country are yet to receive their payments.