Shipment term

Crisis in Sri Lanka: India begins shipping rice to island country in crisis

India has started shipping around 40,000 tonnes of rice to Sri Lanka to help ease the shortage of essential food items in the country facing an acute fiscal challenge and economic turmoil. According to BV Krishna Rao, Chairman of the Rice Exporters Association, India will supply 0.3 million tonnes (mt) of rice to Sri Lanka in the next six months. “All rice shipments to Sri Lanka will be made through ports such as Kakinada, Tuticorin, Chennai and other posts in the southern region,” Rao told FE.

The rice is offered under a $1 billion line of credit to Sri Lanka recently announced by India for the purchase of food, medicine and other essentials. Of this line of credit, 150 million dollars are intended for the supply of rice to Sri Lanka.

“To date, the supply of approximately 40,000 tons of rice to Sri Lanka has been finalized under the line of credit. The first shipment of rice under this framework is expected to arrive in Sri Lanka in the coming days,” according to a statement from the Indian High Commission in Colombo.

Trade sources said that India can ship rice to Sri Lanka within days, while for other countries it would take at least a few weeks to export rice. This shipment of rice from India is expected to bring down grain prices in the island nation ahead of the Sinhalese New Year, which will be celebrated on April 14.

India is also expected to supply other agricultural products such as sugar and wheat to Sri Lanka in the coming months.

According to a senior official, the aid in terms of shipment of rice is seen as a “humanitarian measure to help the people of Sri Lanka during a difficult time”. Sri Lanka has become a net importer of rice as its production fell sharply after banning all chemical fertilizers in May 2021 for making the island nation’s agricultural sector 100% organic. Following reports of a decline in the production of various agricultural products due to the ban on the use of fertilizers, the Sri Lankan government partially lifted a ban on fertilizer imports and allowed the private sector to import.

India has been the world’s largest rice exporter for the past decade – export earnings hit a record $8.7 billion in 2020-21 and topped $9.6 billion dollars in 2021-22. India exported agricultural products such as onion, wheat, pulses, basmati rice and processed fruit products worth $150 million to Sri Lanka in 2020-21.