India’s policy to facilitate trade in the rupee is gaining attention from more and more countries. During the last six months, eight countries including Sri Lanka have open 50 Special Rupee Vostro Accounts (SRVA). Indian importers will be able to make payment in rupee for their imports from the partner country. The payment will be deposited in vostro account of the concerned country’s bank. On the basis of the payment, partner country’s supplier will get payment in their local currency. Deposited amount of vostro will be utilised against the imports by the partner from India. It will reduce demand of US dollar so the currencies of India and other partner countries will not face downward pressure.
Sri Lanka is one of the eight nations which have opened vostro accounts in India. Its garment units will have better access to the Indian market once trade begins in Indian rupee. In fact, trade facilitation in rupee would be beneficial for Sri Lanka which had recently faced economic crisis. The country did not have foreign currency even for its essential imports, which had jolted the country’s garment industry that is heavily dependent for fabric supplies from India and other neighbouring countries.
Sri Lanka’s fabric import from India decreased in second half of last year when the country had imported fabric worth $256.266 million against imports of $336.994 million in H1, 2022 and $307.430 million in H2, 2021, according to Fibre2Fashion’s market insight tool TexPro.
However, the imports increased to $593.261 million in 2022 against $565.848 million in 2021. Sri Lanka had imported fabric worth $410.881 million in 2020, $485.160 million in 2019, $426.046 million in 2018 and $374.214 million in 2017, as per TexPro.