Srilankan crisis is at its peak and through this India’s trade logistics will benefit a lot
Srilanka is under immense pressure at the moment due to the economic crisis that the country is currently facing. The forgein reserves of the country are now next to negligible and due to Srilanka’s obligation to pay $78 million (£63 million) in debt interest, two of the top credit rating companies in the world declared the country had defaulted. Srilanka currency has no reserve but still has to import fuel and food from other countries which has led to inflation. The prices of products like food and fuel will be sold at a much higher price than before.
Srilankan people had to come out on the streets to protest during a serious time for their country.
The interruptions at Colombo have already begun to benefit India’s ports, with Mundra for the first time this year becoming the most expensive port in the world for ordinary containers. It was the third most costly port in April. The main causes of the spike in average container rates at Mundra to $2,489 in May were an increase in container demand and increased traffic. Except for products like food or chemicals that need to be refrigerated, dry storage containers are the most typical containers used to ship dry goods. Even though the situation in Srilanka is not very nice, it in turn means more success for India in the logistics sector. Due to the shift in the maritime dynamics, India has now gotten a wonderful opportunity to cement its port as permanent shipping for containers. All of the shipments of the containers will now be sent to the east coast of India because of the Colombo crisis. Some of the South Indian ports have already started to expand in order to make sure that the heavy traffic coming from Srilanka is handled in a smooth and organised manner.
Most of the shipments will be going to the Indian ports and India will be managing all the shipments for Srilanka
The situation in Srilanka is not going to get smoother anytime soon and there are various other reasons like people protests across the country. The government of Sri Lanka has accrued $51 billion (£39 billion) in foreign debt. It will have to pay $7 billion (£5.4 billion) this year, and corresponding sums in upcoming years, to settle these debts. The government is asking the International Monetary Fund (IMF) for $3 billion in emergency bridging loans so it can make payments. Various countries like the United State of America, France, Italy, Germany have come for the aid of Srilanka. India has also offered to loan an amount for the financial aid of Srilanka and some amount of imports have also been included in this deal. India’s ports will be buzzing for the next couple of months with all the shipments going to the eastern ports till the time Srilankan situation is stable