We need many more Indian companies to look at Sri Lanka.

Trade Talk

We need many more Indian companies to look at Sri Lanka.
webinar banner

We need many more Indian companies to look at Sri Lanka.

01 Nov 2013 Long Read
Upekkha Samaratunga, Consul General, Sri Lanka, Mumbai
For an island nation shaped like a teardrop in the Indian Ocean Sri Lanka seems to be laughing a lot these days.
But Upekkha Samaratunga, Consul General, Sri Lanka, permits herself just a semblance of a radiant smile coupled with the right amount of gravitas suited to her position as diplomat as she enlightens us on the state of bilateral trade between our two countries  and the meaning of her first name. For those of us located north of the Palk Straits who may be ignorant of its semantic provenance, Uppekha translates to mean ´impartial´. Significantly, the specialist in commerce from the University of Peradeniya, the oldest in Sri Lanka, has the demeanour of a judge or a schoolteacher, her measured tone suggesting balance and fairness.

Samaratunga who joined the public service in Sri Lanka in 1988 and has represented her country at missions in various parts of the world notably in Eastern Europe, beginning with her first and most challenging assignment, Russia; then Sweden, Japan, Germany and her current posting in Mumbai, India speaks to SHRIKANT RAO on the growing areas of constructive engagement between New Delhi and Colombo.

Madam Consul General, how important is India on Colombo´s radar?
India is Sri Lanka´s biggest neighbour and has a very large and growing economy. It is a very important market for us. Also, India is right now our No. 1 trading partner, No. 1 foreign investor and No. 1 income generator in terms of tourism arrivals. The Government of Sri Lanka is now very focused towards this market to increase our existing market share and expand to different sectors.

What is India´s market share?
If you are talking about total trade as a trading partner, India´s market share was about 15 per cent in 2012.

Trade between the two countries has been increasing and facilitated by the India-Sri Lanka Free Trade Agreement signed in 2000. It was the first free trade agreement India signed with a foreign country.

Tell us about the current nature of the engagement between India and Sri Lanka in the construction and infrastructure sector, both at the governmental level and at the level of private enterprise.
From the government point of view, since 2010, with the dawn of peace and political stability in the country, Sri Lanka has placed emphasis on the development of infrastructure in the country as a whole. We are particularly focusing on the development of infrastructure in the northern and eastern parts of Sri Lanka on a major scale. Accordingly, India and other countries have come into the picture to contribute in every possible manner to uplift infrastructure in these areas. A lot of investments are being made. Financial commitments are being made by the government as well as foreign investors to upgrade particular infrastructure in that area. The development is in terms of real estate there are a lot of housing projects where Indian private-sector firms like the Tatas have a big presence roads, ports, railways, airports and coal-based power plants. We are looking to build industrial cities over there and relocate industries from the centre to the north and east of the country. These are the infrastructure projects in progress right now. India is a major player in these projects. There are projects being carried out with certain credit lines. The package involves finance as well as technology.

What are Colombo´s expectations from New Delhi for cooperation in the construction arena? What are the opportunities available to Indian firms?
We will leave out the New Delhi part. I would rather prefer we focus on the private sector because right now the foreign investment policy in Sri Lanka is very flexible and the environment is business-friendly. We encourage more and more Indian companies to come and set up business in Sri Lanka, not only in manufacturing but in the construction sector as well. The government´s main focus is to develop infrastructure in Sri Lanka and then, as we move forward to include more and more industries in Sri Lanka, to facilitate better economic growth for the country. For that, we require the support of foreign investors. We need more and more Indian companies to look at Sri Lanka because we are geographically closer to you than other countries.

So, specifically, what are the areas where Indian firms can come into play?
They can come into the picture in power generation, construction, the tourism and hotel industry where we need more infrastructure and investments, and in the entertainment sector. Western countries have become quite expensive because of the depreciation of the rupee, so to a certain extent Sri Lanka has become an attractive destination with the film industry.

What are the areas you are looking to plug?
We have the skills in Sri Lanka we have firms who do substantial work in the construction and engineering sector  but we require technology and finance and capital investments.

Is the reconstruction work still going on in the north?
Yes, it is still in process. We are focusing on highways; road networking is in progress right now. So is power, ports and airport development. There are certain airports we are trying to upgrade. This includes Palali and Ratmalana. We are also looking at hospitals.

Tell us about the important projects happening in Sri Lanka at present.
A new highway that will link the international airport to the city of Colombo will be opened up at the end of this month. The government is now focusing on similar highways leading to the north and one to Kandy, the central part of Sri Lanka. We are looking to foreign investors, specifically from India, to come to Sri Lanka to develop infrastructure in other sectors. It could be shopping malls, business complexes, not just hotels but tourism-related projects and recreational facilities. There is a lot of construction opportunity in Sri Lanka and we need everyone´s participation in various projects available right now. Of course, tourism will be the biggest draw. By 2015, we are trying to bring at least 2.5 million tourists to Sri Lanka from the over 1 million at present. We are aggressively promoting our country in emerging markets, including India. For tourism, we had a road show recently in Bengaluru; very soon, we will have a similar one in Delhi. For investments, we had a road show in Mumbai focusing on the investment opportunities in Sri Lanka.

What kind of an exposure do Indian companies have in your country?
Indian private companies have a considerable presence in Sri Lanka. You have Tatas dominating the hotel industry  they have been there for a long time and companies like CEAT and Gujarat Glass. There are also financial companies including Indian banks operating out of Sri Lanka.

Do you discern growth in our engagement?
We could see that there was 5 per cent growth last year mainly in the tourism sector though not much from the construction and manufacturing sectors. We need to convince people from countries like India to see Sri Lanka as a platform of business opportunity. There are a lot of new opportunities available for private companies to come and invest in Sri Lanka but that has not been exploited to the maximum.

Vital stats

  • India is Sri Lanka´s largest trading partner globally and
  • accounts for 21 per cent of the country´s imports.
  • Indians account for 20 per cent of total tourist arrivals.
  • India is amongst the top five foreign investors in Sri Lanka.
  • Trade has grown rapidly after   the Indo-Sri Lanka Free Trade Agreement in March 2000.
  • The value of bilateral trade increased from $658 million in 2000 to $4.08 billion in 2012.

Private investments
India in Sri Lanka:
CEAT, Gujarat Glass, Tatas, Indian Oil, Gujarat Ambuja, Bharti Airtel, NTPC, Indian Hotels Co, State Bank of India, Indian Bank, ICICI Bank, Indian Overseas Bank, Larsen & Toubro, Cairn India, Mphasis

Sri Lanka in India::
Aitken Spence Hotel Managements, Bank of Ceylon, Brandix India Apparel City, Damro Furniture, John Keells Logistics India, Sri Lankan Airlines, hSenid Software India, DSI Tyre India, Hatton National Bank

Chat board
Chat With Us!