The economic turmoil in Sri Lanka and foreign exchange crisis in Nepal have added to the pressure on Indian exporters who have witnessed a 20% drop in exports to these countries in FY23, compared to the previous year, unless the situation improves. Indian exporters are of the opinion that the fall in shipments to Sri Lanka could be steeper, unless New Delhi extends a fresh line of credit, in addition to the assistance of $2.4 billion already provided since January, to bail out the island nation.
India primarily exports petroleum products, pharmaceuticals, steel, textiles (mainly fabric and yarn), food products and automobiles to Sri Lanka. Exports of many of these products to Sri Lanka are going to ease in FY23.
Similarly, given Nepal’s curbs on imports of luxury items and cars, auto and auto component supplies, which made up about 9% of New Delhi’s total exports to Kathmandu in FY22, are set to drop this fiscal. However, supplies of petroleum products, which accounted for a quarter of India’s total exports to the Himalayan nation in FY22, are not yet restricted.