Indian traders have started loading 40,000 tonnes of rice for prompt shipment to Sri Lanka in the first major food aid since Colombo secured a credit line from New Delhi, Reuters reported.
The Indian Ocean island nation of 22 million people is struggling to pay for essential imports after a 70% drop in foreign exchange reserves in two years led to a currency devaluation and efforts to seek help from global lenders. The shipment of the staple comes before a key festival in Sri Lanka.
Fuel is in short supply, food prices are rocketing and protests have broken out as Sri Lanka’s government prepares for talks with the International Monetary Fund amid concerns over the country’s ability to pay back foreign debt.
India, the world’s biggest rice exporter, last month agreed to provide the $1 billion credit line to help ease crippling shortages of essential items, including fuel, food and medicine. The rice shipments could help Colombo bring down rice prices, which have doubled in a year, adding fuel to the unrest.
Last week, as reported here, the Indian Oil Corporation (IOC) announced the release of 6,000 tonnes of diesel to Sri Lanka to mitigate the spike in power cuts in the island nation, which is facing an unprecedented economic and energy crisis caused due to shortage of foreign exchange.
Sri Lankan President Gotabaya Rajapaksa declared a nationwide public emergency late on Friday following violent protests over the country’s worst economic crisis in decades. The Indian rice will be available before demand jumps for Sri Lanka’s mid-April New Year festival, said a Mumbai-based dealer with a global trading firm.
India’s support comes after previous administrations led by the Rajapaksa family had drawn Sri Lanka closer to China during the past decade, leading to unease in New Delhi.
The 40,000-tonne shipment is part of 300,000 tonnes India will supply to Sri Lanka in the next few months. Sri Lanka has become a net importer of rice as its production fell after Colombo banned all chemical fertilisers in 2021, a move that was later reversed. Indian traders are also likely to start shipping other essential commodities like sugar and wheat in the coming weeks.