South India’s fabric exporters are concerned as the economic crisis in Sri Lanka may lead to delay in payments from buyers in the island nation.
Sri Lanka is an important market for Indian cotton fabric. India exported cotton fabrics worth US $ 179.29 million, up 38.47 per cent from the year-ago period, mainly due to pent up demand.
In recent days, the Sri Lankan rupee has weakened by more than 10 per cent against the US dollar, giving rise to concerns amongst Indian textile and fabric exporters that payments could get delayed. This comes after a slowdown in exports to Sri Lanka.
As per report of The Economic Times, a leading English daily, Siddhartha Rajagopal, ED, The Cotton Textiles Export Promotion Council (Texprocil) said that exports of cotton fabric to Sri Lanka were witnessing an upward trend due to pent up demand. But it started slowing down from August, and then came the economic emergency which disrupted trade. The impact of the economic crisis in Sri Lanka is expected to be felt more in the coming months.
On the other hand, Raja Shanmugam, President, Tirupur Exporters Association, is of the view that the current crisis in Sri Lanka may work in favour of India’s apparel exports.
He said that Sri Lanka is a competitor of India in the apparel sector. Now that the country is going through an economic crisis, global apparel buyers may look at India as a sourcing nation and place more orders.
Ajay Sahai, Director General, Federation of Indian Export Organisations, said, “From the last one year, we have seen Sri Lanka curbing imports of non-essentials such as vehicles and others, but exports of essential items were going on. Now that the payment has become irregular, we have asked the Government for a line of credit to be extended to Sri Lanka.”
It should be mentioned here that Sri Lanka’s economic woes are partly due to the outbreak of Covid-19. Also, the Sri Lankan Government’s decision to issue a ban on the use of fertilisers by Rajapaksa, who wants agriculture to turn totally organic, may have made matters worse.
Praveen Khandelwal, General Secretary of the Confederation of All India Traders (CAIT), said traders are facing payment problems due to the crisis in Sri Lanka.
“Around Rs. 8,000 crore is stuck up in Sri Lanka and there is no clarity when the payments will become smooth,” he said.
