Sri Lanka’s economic crisis has brought immediate difficulties for the Indian textile exporters, but it is also likely to prove beneficial in the short- to medium-term as buyers from the US and Europe sourcing from the island nation may look at India for reliable suppliers. Some Indian exporters have already started receiving business inquiries from buyers.
According to industry sources, ready-to-cut fabrics are largely exported from India to Sri Lanka, where garments are produced for export to other countries.
India traditionally competes with Sri Lanka in the world market. However, due to the smaller size of the textile industry, Sri Lankan capacity and market are not comparable to India. Sri Lanka’s apparel and textile exports grew by 23 percent year-on-year to $5.415 bn in 2021. While India’s total exports of textiles and clothing stood at $39.734 bn in last financial year 2021-22.
Unlike India, Sri Lanka depends on imports for its raw materials, and its imports of textiles and textile products grew by 32.4 percent to $2.206 bn during January-September 2021.
At present, the Government of Sri Lanka is facing the crisis of foreign exchange so badly that it is not able to import even essential goods like petrol-diesel and food. A trader from Tiruppur said that uncertainty of payment has arisen for Indian exporters, so they have stopped textile shipments to Sri Lankan buyers.
Industry sources said that the exporters are facing another challenge of delay in payment of previous shipments. However, the exact value is yet to be ascertained. But according to rough industry estimates, around Rs. 200-300 cr payments are stuck in Tiruppur itself.
Apparel Export Promotion Council Chairman Narendra Goenka said the present crisis in Sri Lanka is for short- to medium-term, and Indian textile exporters are likely to add new foreign buyers who will seek reliable suppliers. “It is expected that Indian exporters may get more orders from next year. Buyers from the US and Europe will move to India in search of a reliable supplier.” According to Goenka, inquiries from foreign buyers have started coming in.
Raja M Shanmugam, President of the Tiruppur Exporters Association (TEA), said that the current crisis in Sri Lanka was unfortunate. “But this crisis can provide an opportunity for countries like India, Bangladesh and Vietnam. International brands buying garments from Sri Lanka will move to these countries. In India, Tiruppur can become natural choice for these buyers due to high quality and low cost. But it is difficult to ascertain the quantum of increase in exports.
