Indian giant Tata picks Lanka for ground-breaking Pakistan move

Minister of Industry and Commerce Rishad Bathiudeen (fifth from right) meets the visiting TATA Sons delegation headed by Madhu Kannan, Member of TATA Group Executive Council and Group Head of Business Development and Public Affairs of Mumbai headquarters of TATA Sons (sixth from left) on 27 May in Colombo

Indo-Lanka-Pakistan tripartite trade received a sudden boost on 28 May as India’s topmost global conglomerate announced its new Lankan investment push, largely aimed at using Sri Lanka as the primary base to enter the competitive Pakistani market terrain. The conglomerate is also bolstering its Lankan quantum across five sectors of investment. 

“We want to use Sri Lanka as our manufacturing base to expand to the Pakistani market. We understand that 35% value addition needed to export to Pakistan under the Sri Lanka-Pakistan FTA and we are ready for this,” announced Madhu Kannan, Member of TATA Group Executive Council and Group Head of Business Development and Public Affairs of Mumbai headquarters of TATA Sons Ltd.

TATA’s Kannan, who was leading the nine-member strong TATA Sons delegation to Colombo, was addressing Minister of Industry and Commerce Rishad Bathiudeen at the EDB on 27 May during the delegation’s meeting with Bathiudeen. Also present were officials from the Department of Commerce and EDB. 

The highly-diversified TATA Group is India’s no.1 global multinational and domestic conglomerate, posting $ 103 b revenues in 2014 and considered as India’s most valuable brand. Brand Finance Global 500 ranked TATA at 65 in its top ‘500 Most Valuable Brands’ of 2015, climbing from rank 70 in 2014.

“Today’s TATA delegation consists of seven TATA companies operating under TATA’s apex holding entity TATA Sons Ltd., which in turn is held by the well-known TATA Trusts. We call our latest Lankan initiative ‘Version 2.0 of TATA in Sri Lanka,’ since our original Lankan entry in 1961 and advancing to the second stage of this long history, we want to expand our current Lankan partnership across five key sectors – automobiles, power and energy, infrastructure including urban, tourism, and FMCG/consumer products. 

“The primary product-line that we want to send from Sri Lanka to Pakistan is TATA automotives. We want to start by exploring this much more in terms of export tariff structures and stages of value addition etc. Apart from this of the five sectors of investment interest we just mentioned, power and energy is a key sector and we would like to start with large-scale wind farms in Northern Province as well as supplying transmission lines for Sri Lanka’s National Grid,” Kannan added.

In 2014, Sri Lanka’s bilateral trade with Pakistan totalled $354 m while Indo-Lanka trade for the same year stood at a huge $4.6 b. Motor vehicles and cars were Sri Lanka’s fifth largest import item from India in 2013 at $125 m.

“TATA’s latest initiative shows the confidence of the international investor community in the new Government of President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe,” said Bathiudeen.

He added: “We are looking to do much more industrial development under this new leadership as well. Automotive making for exports to Pakistan and other countries is possible here and our Government is ready to extend its fullest assistance to TATA Sons to set up here. More than 4,000 items could be exported to Pakistan from Sri Lanka under the Lanka-Pakistan FTA and TATA’s initiative is a big boost to Lanka Pakistan trade as well. More importantly, we welcome TATA’s entry and expansion the five sectors. This will facilitate new employment as well as manufacturing technology to Sri Lanka’s automotive industry as well.”

Two firms – Micro Cars Ltd. and Unimo Enterprises Ltd. (subsidiary of United Motors Lanka PLC) – are currently considered as leading ‘heavy automotive value adders’ due to their hands-on vehicle assembly operations in Sri Lanka, while Ashok Leyland (body fitter of buses and lorries) and David Pieris (assembler of motorbikes and Bajaj) are among other players in the Lankan automotive industry.