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Monday, 6 August 2012 00:00 - - {{hitsCtrl.values.hits}}
In a strong boost to current levels of Indo-Sri Lanka bilateral cooperation, India has unleashed a considerable investment quantum that could be summarised as an entirely new thrust on its bilateral outreach on Sri Lanka.
Doubling current levels of bilateral trade to $ 10 b by 2015, two manufacturing zones one of with has vocational training support, a top bilateral Joint Task Force for economic promotion, $ 5 billion in a massive new round of investments, bigger involvement in Sri Lanka’s on-going oil and gas explorations, and direct linking to Sri Lanka’s five-hub strategy are some of the major initiatives by India in Sri Lanka’s new economic upswing.
“Investment proposals of symmetry and preferential access will create better prospects for both economies. We wish to create institutional linkages with Sri Lanka on its five strategic hubs concept promoted by the ‘Mahinda Chinthana’ policy framework. We are also keen on expanding our presence in the on-going oil and gas explorations in Sri Lanka. Officials of both sides are aware of the realities of strength, tensions and opportunities of this partnership,” announced Anand Sharma, the visiting Indian Minister of Commerce, Industry and Textiles on 3 August in Colombo.
Sharma was addressing Rishad Bathiudeen, Minister of Industry and Commerce of Sri Lanka at the Ministry of Industry and Commerce during his one-to-one Ministerial level meeting with Bathiudeen, just prior to the commencement of bilateral trade discussions between the two countries at 3:15 p.m. at the same premises.
Minister Sharma was joined by his Commerce Secretary SR Rao and top officials of the Indian Department of Commerce while Minister Bathiudeen was joined by his Secretary Anura Siriwardena, top officials of the Department of Commerce of Sri Lanka and several of his Additional Secretaries.
Minister Bathiudeen, starting off bilateral discussions, said: “We are highly appreciative and are thankful for the new export manufacturing zones as well as $ 5 b investment. The Joint Task Force will be a good initiative in order to speed up these and other efforts. For the first time in the history, our two-way total trade reached almost US$ 5 billion in 2011, which I feel is a milestone in our relations. As the Minister knows, this is an unprecedented 750% growth compared to the total trade in 2001.
“You may have also noted that during 2011, the total trade between our two countries under ISFTA has been nearly US$ 1 billion. However, in regard to the bilateral trade, I wish to highlight a fact that India’s exports to Sri Lanka in 2011 registered an annual growth of over 70% (from $ 2.5 m to $ 4,350 m) while Sri Lanka’s exports to India registered an annual growth of only 16.8% (from $ 466 m to $ 521 m). This has created a $ 3,828 m balance of trade in favour of India with an annual increase of 84% over 2010. I am very pleased to note that Indian entrepreneurs are now seriously considering Sri Lanka as the promising venue for their investments as a result President Mahinda Rajapaksa’s leadership and I am confident that this trend will be further improved during the years to come.”
Responding to Bathiudeen, Sharma said: “We want to deepen our economic partnership with Sri Lanka. Both countries have the firm willingness to strengthen the economic relationship. Sri Lanka is the largest trade partner of India within SAARC and South Asia while India is the largest trade partner of Sri Lanka in the world. We want to be a partner and contribute to value addition and manufacturing in Sri Lanka.”
“We set a target to double our bilateral trade to $ 10 b by 2015. Captains of (Indian) industry have accepted and endorsed it. We also agreed to set up a Manufacturing Special Economic Zone (MSEZ) near Trincomalee with Indian support for investments linked manufacturing and exports of auto components and engineering goods. An industrial skills training institute will also be established to assist the MSEZ. A bilateral Joint Task Force (JTF) for economic promotion will be set up by the two governments to expand economic cooperation. The JTF will give recommendations to the two governments within a stipulated period of 90 days. We like to see that there are no extensions given to this JTF than the stipulated 90 days. The JTF will have representatives from various industrial sectors (pvt sector) and public servants in it.
“We also agreed to establish a Pharmaceutical Manufacturing Hub in Sri Lanka with the participation of Indian pharma firms. No investment values are finalised yet on the two manufacturing hubs especially given the nature of Manufacturing Special Economic Zone (MSEZ) near Trincomalee which has vocational training as well, but the investment envisaged is fairly big. The reason for choosing Trincomalee is based on the suggestion by Economic Development Minister Basil Rajapaksa at 02 August Breakfast Meeting,” Minister Sharma revealed.
He added: “$ 5 b n of investments by our corporate sector is also in the pipeline for Sri Lanka in various sectors. We are also keen to see cross-investments from Sri Lanka as well. Already Sri Lankan firms such as Brandix and John Keells have arrived in India.”
Among the Indian firms behind the $ 5 b investment foray to Sri Lanka are Indian Oil Corporation, the fourth largest FMCG company in India Dabur Ltd., the largest marketer of sugar and ethanol in India Renuka Sugar, the real estate and property collaboration of Indian magnates South City Projects (Kolkata) Ltd,, one of the fastest growing housing development firms Tata Housing Development Co, and the $ 33 b Indian conglomerate and also seen as one of the world’s best big companies ITC Ltd. (for hotel sector investments).
“We want to enter Sri Lanka’s infrastructure as well. Indian infrastructure firms have strong capacity and resources and they operate projects across the world and among the well-known projects are in Shakalin (Russia) and South Africa. They have proven them to be finest in terms of capacity and resources. They are ready to enter large-scale Sri Lankan infrastructure projects next,” Minister Sharma stressed.
“The Pharmaceutical Manufacturing Hub and the Manufacturing Special Economic Zone near Trincomalee will both be a part of the mandate of the JTF. We also expect the two manufacturing hubs to be part of the supply chain to the Indian manufacturers. This is the link we want to establish. That is, Indian investments directly linked to manufacturing and exports (strategic to India),” Sharma added.
“Investment proposals of symmetry and preferential access will create better prospects for both economies. We already have investments in many diverse sectors in Sri Lanka and now we want to enter to certain sectors we have not yet gone into in a considerable way-they are agro-processing, food processing, pharmaceuticals, biotech, tourism and knowledge industries. Indian business leaders will further strengthen this foray through their Sri Lankan investment decisions and will promote cooperation.”
Revealing that India has identified new opportunities in the five hubs concept, Minister Sharma said: “We wish to create institutional linkages with Sri Lanka on its five strategic hubs concept – a knowledge hub, commercial hub, naval and maritime hub, aviation hub, and the energy hub- promoted by the ‘Mahinda Chinthana’ policy framework. We wish to create institutional linkages in a strong way and we like to share our knowledge and experience to assist institutional building in Sri Lanka on these five themes.”
Announcing India’s keen interest on Sri Lanka’s oil explorations, Minister Sharma said: “We are also very keen on expanding our presence in the ongoing oil and gas explorations in Sri Lanka. We want to involve much more in both Mannar and Cauvery basin explorations.”
The Sri Lankan side led by Minister Bathiudeen highlighted in detail the concerns raised by domestic stakeholders with regard to certain issues relating to implementation of the Indo-Sri Lanka Free Trade Agreement (ISFTA). Minister Sharma responded: “Officials of both sides are aware of the realities of strength, tensions and opportunities that our partnership has. India will address such issues in the due course, paving way for enhanced bilateral cooperation.”
During the 2 August morning press briefing, Minister Sharma revealed the stance on CEPA: “Secretaries of the Departments of Commerce of both sides will sit down and take this forward.”
