India starts supplying rice to Sri Lanka in first major food aid

Indian traders have started loading 40,000 tonnes of rice for prompt shipment to Sri Lanka in the first major food aid since Colombo secured a credit line from New Delhi.

Two officials told Reuters on Saturday.

The Indian Ocean island nation of 22 million people is struggling to pay for essential imports after a 70 per cent drop in foreign exchange reserves in two years led to a currency devaluation and efforts to seek help from global lenders.

The shipment of the staple comes before a key festival in Sri Lanka.

Fuel is in short supply, food prices are rocketing, and protests have broken out as Sri Lanka's government prepares for talks with the International Monetary Fund amid concerns over the country's ability to pay back foreign debt.

Last month, India, the world's biggest rice exporter, agreed to provide the $1 billion (AED 3.67 billion) credit line to help ease crippling shortages of essential items, including fuel, food, and medicine.

The rice shipments could help Colombo bring down rice prices, which have doubled in a year, adding fuel to the unrest.

"Rice loading has started in southern ports," said B.V. Krishna Rao, managing director of Pattabhi Agro Foods, which is supplying rice to Sri Lanka State Trading (General) Corp under the Indian Credit Facility Agreement.

"We are first loading containers for prompt shipments, and vessel loading will start in a few days."

Sri Lankan President Gotabaya Rajapaksa declared a nationwide public emergency late on Friday following violent protests over the country's worst economic crisis in decades.

The Indian rice will be available before demand jumps for Sri Lanka's mid-April New Year festival, said a Mumbai-based dealer with a global trading firm.

"Right now, only India can ship rice quickly. Other countries need weeks, India can deliver in days," the dealer said.

India's support comes after previous administrations led by the Rajapaksa family had drawn Sri Lanka closer to China during the past decade, leading to unease in New Delhi.

Rao said that the 40,000-tonne shipment is part of the 300,000 tonnes India will supply to Sri Lanka in the next few months.

Sri Lanka has become a net importer of rice as its production fell after Colombo banned all chemical fertilisers in 2021, which was later reversed.

Indian traders are likely to start shipping other essential commodities like sugar and wheat in the coming weeks, the dealer said.