Indian interest - Sri Lanka readying for dedicated trade talks in March

Sri Lanka readying for dedicated trade talks in March

Being the first FTA for India and Sri Lanka, the 1998 Indo-Sri Lanka Free Trade Agreement carries substantial sentimental value for Sri Lanka.
Together, both countries can play a major role in elevating Indo-Sri Lanka economic relations from the current level to a much higher plane. The Sri Lankan private sector is also upbeat on the outcome of the outcome of ‘Partnership Summit 2012,’ held in Hyderabad.

“I strongly believe that the Indo-Lanka FTA is the most significant and innovative Indo-Sri Lanka partnership we have realised to date on the commercial front,” said Minister of Industry and Commerce Rishad Bathiudeen on 12 January.
Bathiudeen was delivering the inaugural address at the 18th Partnership Summit 2012, which started on the same say in Hyderabad, India, with the participation of high-profile ministers from several countries and a large number of industry leaders, representing 47 countries.
Bathiudeen was leading the Sri Lanka delegation to the summit. In addition to officials of the Department of Commerce, the Lankan delegation included representatives from Lankan private sector players (involved in imports, exports and investments with India) such as top apparel maker Brandix Lanka Ltd. (which has garment manufacturing facilities in Andra Pradesh, giving employment to 14,000 Indian nationals), International Foodstuffs Co Pvt. Ltd., Mushan International (a top Lankan gem exporter to India and elsewhere) and E-W Information Systems (EWIS).
Minister Bathiudeen stated that Sri Lanka had entered into a new phase of development since the defeat of nearly three decades of terrorism in 2009.
“Thanks to the visionary and dynamic political leadership of President Mahinda Rajapaksa, Sri Lanka today is a highly stable and peaceful country. The dawn of peace has given a new lease of life and hope to all communities in Sri Lanka,” the Minister added.
The Minister expressed hope that the business community of the two countries, together with the support of policymakers, could play a major role in elevating the Indo-Sri Lanka relations to a much higher level.
Minister Bathiudeen elaborated: “Trade relations between our two nations marked a historical milestone with the signing of Indo-Lanka FTA in 1998. I am sure it also played the role of DNA in our subsequent economic integrations with other countries. Following the ISFTA, which became operational in 2000, trade between our countries has increased in an unprecedented manner. The value of two-way trade had grown from about US$ 650 million in 2000 to well over US$ 3 billion by 2010. I am sure that it will reach US$ 4 billion very soon.”
Indian FDI started moving into Sri Lanka in 1982 when Ashok Leyland decided to set up a bus assembling plant in collaboration with the Government of Sri Lanka. However, substantial Indian investments began flowing in from only mid-1990s. They included investments in construction materials such as steel, cement, paint industries and roofing sheets.
The third wave of Indian investment followed the Indo-Lanka FTA with the developments in air traffic and relaxation of visas for Indian nationals. The cumulative Indian investment in Sri Lanka, which stood at around US$ 24 million in 2000 has increased to a staggering US$ 600 million by 2011. Today, India ranks within the top five foreign investors in Sri Lanka.
“Several Indian companies such as Indian oil, Bharti Airtel, ICICI Bank, Asian Paints, Ashok Leyland, etc., have immensely benefited by investing in Sri Lanka. Meanwhile, companies such as Taj Hotels and CEAT have become household brands among the Sri Lankan people. Indian investors have also been enjoying the benefits of the constitutional guarantee of investments, duty-free market access under the ISFTA, double taxation and investment protection treaties,” he added.
The conquest of Indian investors further triggered during the recent past, when major firms such as Primal glass, Fortis Healthcare, Mphasis, TATA communication, First Source IT, Dabur consumer products, Axis Bank etc., expanded their operations into the island.
Both Sri Lanka and India have been recording an impressive performance on the tourism front as well. As many as 250,000 Sri Lankans had visited India during 2010, while India topped the list of tourist arrivals in Sri Lanka in the same year. India continued to be at the top in 2011 as well recording 138,000 tourist arrivals from Jan.–Oct. 2011. This registers a spectacular growth of 45% in comparison to the same period in 2010.
Sri Lankans increasingly tend to see India as one of the most sought-after destinations for medical treatments and shopping. Indian cities and Colombo have ever-expanding air routes to facilitate swift movements in each direction. Every week, there are over 100 flights between Colombo and Indian cities.
“Thanks to the visionary and dynamic political leadership of President Mahinda Rajapaksa and our brave armed forces, Sri Lanka today is a highly stable and peaceful country. The dawn of peace has given a new lease of life and hope to all communities in Sri Lanka. Sri Lanka has now reached a high growth phase, both economically and socially,” Minister Bathiudeen added.
The Sri Lankan private sector representatives in the business delegation were upbeat on the outcome of their visit to Andra Pradesh. Andra Predesh Chief Minister N. Kirankumar Reddy said that Andra Pradesh would gladly continue to support Sri Lankan firms entering his State. “You have our fullest support,” he said.
Sources from the summit revealed that MAS Holdings, another Sri Lankan apparel giant, was also now looking to set up manufacturing facility in AP to maximise on labour and other manufacturing resources that AP offers the Sri Lankan apparel industry.
Emeritus Senior Minister of Singapore Goh Chok Tong, Minister of Foreign Trade UAE Lubna Al Qaimi, Minister of Trade of Indonesia Gita Wirjawan, Finance Minister of Afghanistan Omar Zakhiwal, Minister of Commerce Industry and Textiles of India Anand Sharma and Chief Minister of Andhra Pradesh Kiran Kumar Reddy also addressed the inaugural session.
Thereafter, in the afternoon of January 12, Minister Bathiudeen also took part in two bilateral sessions representing Sri Lanka, with India and UAE.
At the opening of the bilateral sessions with India, both Bathiudeen and Sharma stressed on the long standing historic trade relations between the neighbours. Minister Bathiudeen thereafter promptly brought to the notice of Indian Minister Sharma some of the concerns expressed by certain Sri Lankan business leaders on Indo-Lanka FTA related issues.
Minister Sharma requested Sri Lanka to submit all these concerns in writing to him, after which necessary steps would be taken. Thanking him for the keenness shown, Minister Bathiudeen thereafter officially extended Sri Lanka’s invitation to India to the forthcoming mega Sri Lanka Expo 2012 to be held in March in Colombo, after a lapse of 15 years.
Accepting Minister Bathiudeen’s invitation, Minister Sharma indicated that he may lead the high-level Indian business and official delegation to Sri Lanka Expo 2012. Both Ministers also agreed to hold a fresh round of bilateral trade talks with Minister Sharma’s participation in Colombo coinciding with Expo 2012.
Both countries also agreed to dedicate the forthcoming session to pending matters pertaining to both the Indo-Lanka FTA and Indo-Lanka CEPA. Minister Bathiudeen stressed that he was eagerly looking forward to Minister Sharma’s visit to Sri Lanka, bringing down the curtain on the 12 January Indo-Lanka bilateral trade sessions in Hyderabad.
Thereafter, Minister Bathiudeen also held another bilateral trade session with UAE Minister of Foreign Trade Sheikha Lubna bint Khalid Al Qasimi who was taking part in Hyderabad’s Partnership Summit 2012. Both Ministers reviewed the progress of Sri Lanka and UAE bilateral discussions on 23 November 2011 in Colombo amidst renewed trade ties between both countries.
Bathiudeen also renewed his invitation to UAE for high level UAE delegations to the Expo 2012 mega show, which was promptly re-confirmed by Lubna. UAE is the largest investor in Sri Lanka from the Gulf economies, having invested nearly $ 100 million and also UAE has been ranked as the third largest investor in Sri Lanka in 2010.