An economic crisis in Sri Lanka has pushed chili exporters from India into deep trouble as the importers in the island nation are unable to clear dues. 

Chili importers in Sri Lanka have reportedly not paid dues to Indian traders for the past several months, leading to a crisis in the chilli market in India, the Times of India reported. 

Sources said exporters have been struggling to collect over INR 250-300 crore from their Sri Lankan business partners. 

However, no exporter is willing to lodge a complaint against the defaulters as they fear it might complicate debt collection.

Sri Lanka is one of the biggest importers of Indian chili stocks, mainly from Andhra Pradesh. According to trade analysts, AP farmers produced over three crore bags of dry red chili during the last crop season. 

This is equivalent to nearly 1.4 crore quintals of production and considered to be the highest production in the past decade. The country’s total chili production is around six crore bags or nearly three crore quintals.

Guntur, Krishna and Prakasam contribute over 70-80 per cent of the state’s total chili production. 

Thanks to the presence of the biggest agriculture market yard, big merchants, including exporters, handle business transactions from Guntur.

Riding on a bumper crop and huge demand, merchants from AP exported over one crore quintal of stock to different nations during 2020-21, of which over 30 per cent went to Sri Lanka. “Sri Lanka, Bangladesh and China are the biggest importers of chili from AP. Each nation picks up at least 25-30 lakh quintals of stock every year. 

However, prices offered by the Sri Lanka traders are higher compared to prices by China merchants,” said a leading chili exporter Ch Venkateswara Rao.

Experts said Sri Lanka’s economic crisis was the result of poor tourism activity since the outbreak of Covid-19 in 2020. The island nation’s decision to make a sudden shift to organic farming practices is said to have further crippled its economy. 

Many big business houses in the country are said to be struggling to overcome the crisis, resulting in payment delays to importers of agricultural produce.

Sources said big chili exporters from AP are waiting to get around 300 crore from their business partners. This is said to have led to many exporters failing to clear their dues to bankers and small merchants who offered stocks to them.

“We are hopeful of finding a solution to the crisis through mutual negotiations. We will seek support from the external affairs ministry, if needed,” said an exporter.

The European Union (EU) and the United Nations Development Program (UNDP) in Sri Lanka have come together to support the Government and people of Sri Lanka to build back tourism as a resilient and sustainable sector.

This will be done through the ‘Transforming Tourism in Sri Lanka: Emerging from crisis as a strong, resurgent and rebranded industry’ project. 

The Tourism sector being a vital foreign exchange earner and source of employment in Sri Lanka’s economy has suffered multiple crises since the 2019 Easter attack and the ongoing COVID-19 pandemic recognising the need to revitalise tourism.

A key expected outcome of this initiative is to strengthen the tourism policy framework and institutional capacity at the national level, providing vital policy direction to rebuild, recover and trigger transformational change for more sustainable and inclusive tourism in the island. 

The draft Tourism Policy aims to create a unique tourism experience for travelers to Sri Lanka and create sustainable and inclusive benefits for all actors in the tourism industry. 

This in turn will aid in protecting Sri Lanka’s best features; its natural resources, culture and history while benefiting local communities, taking us a step closer to achieving the Sustainable Development Goals — leaving no one behind.

To this end, the Ministry of Tourism, in line with the recently published draft National Tourism Policy and public call for comments to the draft, held a meeting yesterday to discuss the engagement of the EU and UNDP in supporting tourism, particularly, in the implementation of the National Tourism Policy. 

This was revealed at a meeting  chaired by Ministry of Tourism Secretary S. Hettiarachchi, with the participation of the European Union Delegation to Sri Lanka and the Maldives Head of Cooperation Jenny Correia Nunes, and UNDP Resident Representative in Sri Lanka Robert Juhkam. 

The Ministry of Tourism looks forward to cross-collaborating and working closely with all other relevant ministries, in order to create a more resilient tourism industry.”

Reiterating the EU’s support  EU Head of Cooperation Jenny Correia Nunes said: “The EU has been supporting Sri Lanka in a number of sectors including rural development, 

private sector support, justice and social inclusion. In response to the impact of the COVID-19 pandemic, we are now also focusing on tourism as we see the great potential and value addition it brings in terms of holistic economic and social development for the country and its citizens.”

Highlighting UNDP’s overall support to tourism recovery, Juhkam said: “UNDP helped bring together multiple stakeholders to widen the consultative process, importantly bridging perspectives and ensuring inclusiveness of Sri Lanka’s sustainable tourism revival. 

Creating this platform for key associations, communities, and private sector and government entities at the national and sub-national level to provide their recommendations has significantly strengthened the draft National Tourism Policy. 

UNDP looks forward to assisting the Ministry to continue this consultative platform to promote the implementation of the policy’s social, economic and environmental sustainability objectives in years to come.”

The collaboration between the EU and UNDP signifies the critical importance of tourism to Sri Lanka’s post-COVID-19 economic recovery. The Transforming Tourism project will aim to address the urgent needs of the industry, strengthening the institutional framework and capacity to set it on a trajectory for a greener, more resilient future.