Indo-Sri Lankan bilateral trade has the definite potential to reach $10 billion in the next few years, if efforts are made by both sides, considering the existence of free trade agreement signed way back in 2000
Sri Lanka, our southern neighbour, occupies a close, strategic and religious association and connection with India, from time immemorial. True, there was a brief period of problems created by LTTE and with the elimination of Prabhakaran in the north, peace has slowly returned to this emerald Island.
It is predominantly an agricultural country and, has been a leading grower of quality tea throughout the world for almost a hundred years now. It may be remembered that the back bone of the plantation workers were originally from India (mostly Tamils) who were taken to the island by the British masters, and who has stayed there all these years.
Sri Lankan imports are a little over $20 billion and the imports about $11 billion, according to information published by the Ministry of Commerce, Government of Sri Lanka, for the year ending 2011. It has a large non-resident population of working men and women in the Middle East, who are the biggest foreign exchange earners, and who, dutifully remit the funds back to the country. It traditional exports, apart from tea and spices, are textiles, apparels, pharmaceuticals, precious stones like diamonds, rubies and emeralds. Other items of importance are rubber and rubber products, coconut, fish etc.
Only recently, Cairn India has discovered some gas offshore and further explorations are underway. However, the country continues to import petroleum and allied products, textile fabrics to support the apparel industry which is well organized in the country, mineral products, steel and allied products, foodstuffs and transportation equipments are the major items.
Imports of many of these items come from India, and the Indian share in 2011 (calendar year) was 21.3%; China was a close second with 16%; Singapore at 8.6%; Iran at 7.7% UAE 4.4% and Malaysia at 4.3%.
Indo-Sri Lankan bilateral trade has reached $5 billion and has the definite potential to reach $10 billion in the next few years, if efforts are made by both sides, considering the existence of free trade agreement that was signed way back in 2,000!
Being India's closest neighbour, Sri Lanka is also subject the whims of the Monsoon which can play havoc in its agriculture. The last monsoon, unfortunately, was insufficient and has brought untold misery to its farmers.
Media reports indicate that the ensuing harvest is likely to be much less than half of what was obtained last year, particularly for the Northern province. Rice cultivation has been hit hard and for the "aam aadmi" in Sri Lanka, the main food on the plate has been traditional rice with dry fish! There is fear about the New Year celebrations, which falls around the middle of April (and it coincides with the Tamil New year for the Sinhalese, which comes a day before or after).
In so far as fishing is concerned, the Tamil population on either side, both the Sri Lankan Tamils in the north and the Tamils from Tamil Nadu, have been at logger heads, each accusing the other for poaching in "their" waters, with Lankan Navy playing a role, causing heartburn to both!
According to information available, the Northern Provincial Council has been trying to obtain foodgrains from farmers' cooperatives for supplies to the people, but this is not happening, simply because the last monsoon was not bountiful; there is not guarantee, at this stage, that the ensuing monsoon will be adequate to drench the parched lands!
Estimates vary, but overall production of rice may fall between 25% and 35% of the requirements. Already small quantities of rice are being continuously imported, in the last few months from Thailand, China and India.
Sri Lanka may be heading for a food crisis and the only way they can manage to overcome the current impasse by immediate imports of foodgrains, such as rice, wheat, maize and items like sugar and pulses.
India must not wait for Sri Lanka to approach for assistance. India must offer all that is required, if necessary, on medium to long term credit all these items. Our marketing effort in that country has been inadequate, to say the least.
Sri Lanka is our friend; it needs assistance and India must volunteer to meet this need.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
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