The local businesscommunity still isn't at ease with massive Indian investments.
Indian industry is a major investor in Sri Lanka. Eleven years after the Free Trade Agreement between the two countries came into force, the Sri Lanka High Commissioner to India, Mr Prasad Kariyawasam gives a bird's-eye view of why Indian companies are keen to invest in his country. Excerpts from the interview:
There seems to be a sudden spurt in the Indian business community going to Sri Lanka. Why?
I can give a bird's-eye view. The FTA became operational in 2000, so it has been in place for 11 years. Since then, bilateral trade has increased exponentially. FTA provided opportunities for Sri Lanka to try and balance the trade gap as well. But it hasn't. There is a massive gap in favour of India still, which is natural, given India's industrial base. But Sri Lankan companies are also catching up; so bilateral trade is becoming substantial.
Then, there are certain opportunities for Indian businesses to invest in Sri Lanka in such a manner so as to use Sri Lanka as a hub. Using Sri Lanka as a hub is something which we want to promote and we think this idea will be attractive to a lot of Indian businesses.
Has this picked up in the past few years?
No, it has been a gradual increase, but since the conflict has been resolved, it has given a tremendous boost of confidence to Indian businesses to look at Sri Lanka as a possible destination for leisure travel and investment. There are a lot of opportunities that are opening up in liberated areas in the North and East. There is tremendous work going on and Indian companies are involved big time, especially under the aegis of the credit lines provided by the Indian Government. The Indian Government has given credit lines of more than $1 billion to Sri Lanka.
IRCON is doing a big project worth $800 million, to rehabilitate the northern railway line. The latest investment is a joint venture between Ceylon Electricity Board and NTPC, to do a 500 MW power plant in Trincomalee. Some people are interested in hotels, leisure activities, and the services sector. There is an interest from software developers.
We have more than 100 flights a week to Colombo, from Indian destinations.
Have Indian investments found their way in the North?
If you look at the northern province of Sri Lanka, last year there was a 22 per cent growth in GDP. The investments have come primarily from India. But the Government is also investing, as we have to do rehabilitation work. In rehabilitation of the North, except for the Government of Sri Lanka, the other primary partner is India.
What about the private sector?
Indian Bank is expanding its network. It has now set up a branch in Jaffna. It may even go to Kilinochi. Taj is already there. Bharati Airtel is there and Cairns is there.
Sri Lanka's goal is to be a hub for Indian business.
From there, they can expand, because we have FTA with Pakistan as well.
What about education sector?
The education sector isn't yet really open. The moment we open it, we expect there will be big interest from India.
What's holding it back?
We aren't allowing private universities as yet.
Any move to change that?
There is some idea to open up the education sector to the private sector by-and-by. When that happens, we believe there will be big interest from various Indian educational institutions and room for them.
Are there concerns that India is flooding the Sri Lankan market?
Those concerns are there among some local communities. That is the reason why we haven't been able to progress from the FTA to a Comprehensive Economic Partnership Agreement.
It is a logical step, but it is taking some time, because we have to bring all the stakeholders on board. The local business community still isn't at ease with massive Indian economic investments.
Which sectors aren't in favour?
Some in the services sector are a little nervous.
Source: The Hindu - Business Line
