Sri Lanka is proposing that the Indian rupee be made a tradable currency in the country which, if approved, would provide a huge boost to tourist arrivals from India.
The proposal was mooted by Sri Lankan president Ranil Wickremesinghe in talks with Indian prime minister Narendra Modi during the former’s visit to India on July 20.
India is currently Sri Lanka’s biggest source market, with arrivals totalling 116,193 between January and June this year, up 68,761 from the same 2022 period.
An Indian External Affairs Ministry spokesperson said in a media briefing that Sri Lanka has identified the Indian rupee as “a designated foreign currency in their system”.
India is Sri Lanka’s neighbour and biggest trading partner, with one Indian rupee equivalent to four Sri Lankan rupees.
Currently, the US dollar is the only tradable currency in Sri Lanka for all transactions, including those made by tourists.
Sri Lankan foreign affairs minister Ali Sabri told reporters on Saturday that there was a strong possibility of adopting the Indian rupee as a valid currency in Sri Lanka, with anticipated arrangements to facilitate seamless business transactions for Indian tourists visiting the country – a move that was welcomed by the travel industry, albeit with some caution.
Sunil Dissanayake, chairman of the Northern Province Tourism Bureau, said the proposal would pave the way for more Indian tourists visiting the country, particularly to the north where most of the minority Tamil community live.
Northern Sri Lanka is connected with India via the latter’s Alliance Air airline, which started four weekly flights last December between Chennai in southern India and Jaffna in northern Sri Lanka. These services were boosted to daily operations since July 16 due to growing demand.
Dissanayake, who is also director and CEO of the Colombo-based Bandaranaike National Memorial Foundation (BMICH), the largest convention and exhibition centre in Sri Lanka, said plans were underway to extend Alliance Air flights to Colombo International Airport Ratmalana, in the outskirts of the capital city.
Ahintha Amerasinghe, managing director Worldlink Travels, said that while the move would boost Indian traffic to Colombo, it is vital to have a process to allow Indian rupees to be used in Sri Lanka.
“While we offer hotel rates in US dollars, that would have to change for Indian visitors. The process and infrastructure have to be developed before any decision is (made),” he noted, adding that this would benefit Indians, especially those who have found it difficult to secure dollars when travelling overseas.