Economic and Trade Investment
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Overview

India is Sri Lanka's closest neighbour. The relationship between the two countries is more than 2,500 years old and both sides have built upon a legacy of intellectual, cultural, religious and linguistic intercourse. Relations between the two countries have also matured and diversified with the passage of time, encompassing all areas of contemporary relevance. The shared cultural and civilization heritage of the two countries and the extensive people to people interaction of their citizens provide the foundation to build a multi-faceted partnership. In recent years, the relationship has been marked by close contacts at the highest political level, growing trade and investment, cooperation in the fields of development, education, culture and defense, as well as a broad understanding on major issues of international interest.

India and Sri Lanka enjoy a vibrant and growing economic and commercial partnership, with bilateral trade growing rapidly in the last decade and a number of leading Indian private sector companies investing in Sri Lanka and establishing a presence in this country. Sri Lanka is India's largest trade partner in SAARC. India in turn is Sri Lanka's largest trade partner globally. Much of the impetus for the current level of our economic interaction stemmed from the signing and entry into force of the Free Trade Agreement (FTA) in 1998 and 2000 respectively.

In 2012, Sri Lanka continued to be the largest trading partner of India in South Asia. Although bilateral trade declined to US$ 2.03 billion in 2009, largely as a result of the global economic downturn, it rebounded to US$ 3.04 billion in 2010 and reached US $ 4.86 billion in 2011, which was a new peak since coming into force of India-Sri Lanka Free Trade Agreement in March 2000. According to Sri Lankan Customs trade data the bilateral trade amounted to US$ 4.01 billion in 2012. Sri Lanka's imports from India amounted US$ 3,483.74 million and exports to India amounted US$ 518.71 million registering a decline of 19.51% and 1.91% respectively as compared to corresponding period of 2011. India had a share of 19.52% and 5.69% respectively in the global imports and exports of Sri Lanka during 2012. The decline in exports from India to Sri Lanka in 2012 is largely due to steep increase in the excise duty imposed on the import of vehicles on two occasions during the year 2012 that has seriously affected the competitive advantage enjoyed by Indian auto companies and overall volume of vehicles imported from India has declined by 50-60%. This had major adverse impact on the overall bilateral trade.

While Sri Lankan exports to India have increased substantially during past 12 years since 2000 when ISFTA came into force, they have lagged behind the high growth in India?s exports to Sri Lanka, resulting in a widening of the balance of trade. This is largely because of the lack of export capacity from Sri Lanka to service Indian requirement and also due to increase in imports from India because of competiveness of our exports. Interestingly, over 50% of our exports to Sri Lanka are outside the list of products covered by the FTA, thereby indicating their overall competitiveness in the Sri Lankan market.

Hon'ble Minister of Commerce, Industry & Textiles, Shri Anand Sharma's visit to Sri Lanka from 2-5 August 2012 was very significant and it has laid the foundation for further deepening of trade and investment links between the two countries. Coinciding with the visit, the Confederation of Indian Industry organized the "India Show - Land of Limitless Opportunities" in Colombo which was inaugurated by the CITM on 2 August 2012 in which 108 Indian companies with a very wide range of products participated. The first inaugural meeting of the India-Sri Lanka CEOs Forum was also held on 4 August 2012. During the visit, a Joint Task Force was also constituted to work out the modalities for setting up a Special Economic Zone in Trincomalee, establishment of a manufacturing hub for pharmaceuticals and to extend cooperation for revival of textile sector in Sri Lanka. The Indian side have offered concrete proposal to Government of Sri Lanka to enhance its export capacity by attracting FDI in fields of pharmaceuticals, textiles and manufacturing.

In 2012,
India emerged as the fourth largest overall investor in Sri Lanka with investments of US$ 160 million. As per figures compiled by the Sri Lankan Board of Investment, India was the second largest foreign direct investor in Sri Lanka in 2011, with an investment of US$ 147 million (out of a total inbound FDI of US$ 1057 million). Since 2003, Indian cumulative investment is more than US$ 800 million. The main investments from India are in the areas of petroleum retail, hospitals, telecom, vanaspati, copper and other metal industries, real estate, telecommunication, hospitality & tourism, banking and financial services, IT and food processing (tea & fruit juices). The notable Indian investments committed in the recent past are from Shree Renuka Sugar to set up a sugar refining plant at Hambantota (US$ 220 million), Dabur to set a fruit juice manufacturing plant (US$ 20 million), Altair Project by South City, Kolkata for real estate development in Colombo (US$ 400 million) and Krrish Square Project by Krrish Group for Mixed-development in Colombo (US$ 460 million). On the other hand, the last few years have also witnessed an increasing trend of Sri Lankan investments into India. Significant examples include Brandix (about US$ 1 billion to set up a Brandix India Apparel City spread over 1,000 acre land in Vishakapatnam), MAS holdings, John Keels, Hayleys, Aitken Spence (Hotels), Ceylon Biscuits (Munchee brand), Carsons Cumberbatch (Carlsberg) and DRH Logistics International apart from other investments in the freight servicing and logistics sector.


After the end of armed conflict in 2009, substantial opportunities for reconstruction, infrastructure development and revival of local economy emerged. India announced a package of Rs. 500 crores as grant for rehabilitation/reconstruction activities, apart from assistance for construction of 50,000 houses for IDPs in Northern and Eastern Sri Lanka. Several large infrastructure projects supported by Lines of Credit (LoC) amounting to over US $ 1 billion are being funded by Government of India for restoration of arterial railway lines connecting the north and south of Sri Lanka, wreck removal, dredging and port revival at Kankesanthurai (KKS) and the development of a civilian airport at Palaly. NTPC has incorporated a Joint Venture in partnership with Ceylon Electricity Board (CEB), for construction of a 500 MW coal-based power plant in Sampur, located south of the Trincomalee harbour. Government of India has pledged a separate Line of Credit of US$ 200 million to enable construction of key infrastructural facilities associated with this project.


In tourism, India continued to be the largest contributor with every fifth tourist being from India. In 2011, out of the total 855,975 tourists, 171,374 were from India constituting 20.02%. In 2012, the tourist inflow to Sri Lanka increased to 1005,605, 176,340 were from India showing an increase of 2.9%. Sri Lankan tourists too are among the top ten sources for the Indian tourism market. In 2012, around two lakh visas were issued by the High Commission in Colombo to facilitate travel between India and Sri Lanka.



BILATERAL AGREEMENTS 


The juridical framework for the relationship is provided by a Free Trade Agreement, a Double Taxation Avoidance Agreement, a Bilateral Investment Protection and Promotion Agreement. Bilateral agreements/MoUs on Air Services, Small Development Projects, Cooperation in Small Scale Industries and Cooperation in Tourism and an Agreement on Cooperation in Science and Technology also exist. A Comprehensive Economic Partnership Agreement (CEPA) is under negotiation.


India-Sri Lanka Free Trade Agreement (ISFTA)


The main framework for bilateral trade has been provided by the India-Sri Lanka Free Trade Agreement (ISFTA) that was signed in 1998 and entered into force in March 2000. The basic premise in signing the ISFTA was asymmetries between the two economies, local socio-economic sensitivities, safeguard measures to protect domestic interests, and revenue implications so as not to impact high revenue generating tariff lines in the short term. In a nutshell, India sought to do more without insisting on strict reciprocity from Sri Lanka. This is reflected in the respective obligations of the two countries under the ISFTA where India agreed to open more tariff lines upfront and within a shorter time span of three years as against smaller and more staggered openings by Sri Lanka which was provided a longer time of eight years


As a result of ISFTA, currently 4150 Indian tariff lines have been made zero duty for Sri Lankan exports to India. Similarly, 3932 tariff lines have been made zero duty for Indian exports to Sri Lanka. In addition to these steps, India has offered quotas to Sri Lanka on certain tariff lines (a) 15 million tonnes of Tea (5 tariff lines) with 50% margin of preference with no port entry restrictions since June 2007; (b) Textiles, where there is a 25% tariff reduction for 528 Textile items; and (c) Garments where the 50% margin of preference on 8 million pieces over 233 tariff lines. The Garments quota terms have been further liberalized through a MoU on October 5, 2007 by which the Government of India has issued a Custom Notification No. 52/2008 dated 22 April 2008 giving immediate effect to the MoU. As a result, India has reduced duty to zero and removed restrictions on entry ports and sourcing of fabrics from India for 3 million pieces of apparel products from Sri Lanka. India has also removed port restrictions on the balance 5 million pieces of apparel products. These 5 million pieces of garments will be allowed to enter India at zero duty or Margin of Preference of 75% depending on the product category provided that they are manufactured using Indian made fabrics. India has recently decided to do away with the condition of 'Indian made fabrics' and a formal notification is expected soon.










As of now, 1180 tariff lines remain in the Sri Lankan negative list that includes Agriculture/livestock items, rubber products, paper products, Iron and Steel, machinery, and electrical items. On the Indian side, there are 429 items in the negative list, which include garments, plastic products and rubber products etc.








ISFTA Rules of Origin



In order to receive ISFTA benefits, the merchandise exported between India and Sri Lanka should comply with the following Rules of Origin criteria.


Wholly Obtained Products


All wholly obtained products such as tea, fish, spices etc. will be able to enjoy duty free benefits at each other's markets without difficulty, provided they are eligible for duty concessions.


Products not Wholly Produced or Obtained 


These include the products manufactured using imported raw materials. In order to enjoy ISFTA benefits, the products should comply with the following criteria.


The Domestic Value Addition (DVA) in the exporting country should not be less than 35% of the FOB value of the finished product and


HS Codes of the imported raw materials and the finished products should be different at 4-digit level. (Change of Tariff Heading criteria)





Cumulative Rules of Origin


The Cumulative Rules of Origin encourage the contracting states ( India and Sri Lanka ) to source raw materials needed for their exports form each other. Accordingly, an exporter has to show only a minimum DVA of 25% of the FOB value of the finished product, provided the raw materials imported from the other contracting state accounts for not less that 10% of the FOB value of the particular product. (In other words, the aggregate value addition should not be less than 35% of the FOB value of the finished product, while the DVA in the exporting country should be minimum 25% of the FOB value)


Under SAFTA, the Rules of Origin and Cumulative Rules of Origin are slightly different and the SAFTA agreement text must be consulted before making use of this provision.


Operational Certification Procedures (OCP)


Both ISLFTA and SAFTA specify Operational Certification Procedure for obtaining Certificates of Origin (COO) to make products eligible for concessions in the country of export under the relevant agreements. These must be carefully consulted and followed to avoid disappointment. The validity of the COO under SAFTA is 12 months and can be issued within 3 working days of the shipment of the product. The ISLFTA is silent in this regard and it is advisable to obtain COO before the consignment is shipped to avail benefits under the ISLFTA.


Designated authority for the issue of certificates of origin



In Sri Lanka


Director General of Commerce,

Department of Commerce,

4th Floor, Rakshana Mandiraya,

Colombo 2. Sri Lanka.

Tel: 94 - 1 - 329733

Fax: 94 - 1 - 430233

Email: fortrade@sri.lanka.net



In India 


Export Inspection Council of India (Corporate Office)


(Department of Commerce)

(Ministry of Commerce & Industry, Government of India)

3rd Floor - NDYMCA Cultural Centre Building,

1, Jaisingh Road,

New Delhi - 110 001.

Tel: +91-11-23341263/ 23748189/ 23365540 

Fax: +91-11-23748024

E -mail: eic@eicindia.gov.in

Website: www.eicindia.gov.in


For more information on ISFTA please visit:


Department of Commerce, Govt. of Sri Lanka - http://www.doc.gov.lk/web/indusrilanka_freetrade.php

Department of Commerce, Govt. of India - http://commerce.nic.in/trade/international_ta_indsl.asp

High Commission of India, Colombo - www.hcicolombo.org


South Asian Free Trade Area (SAFTA)


The Agreement on South Asian Free Trade Area (SAFTA) came into force from 1st January, 2006. India, Pakistan and Sri Lanka are categorized as Non-Least Developed Contracting States (NLDCS) and Bangladesh, Bhutan, Maldives, Afghanistan and Nepal are categorized as Least Developed Contracting States (LDCS). With SAFTA in force the concessions under SAPTA signed in 1995 ceased in respect of Sri Lanka and India as they are classified as NLDCSs.


Article 7 of the SAFTA Agreement provides for a phased tariff liberalization programme (TLP) under which, in two years, NLDC would bring down tariffs to 20%, while LDCS will bring them down to 30%. Non-LDCS will then bring down tariffs from 20% to 0-5% in 5 years (Sri Lanka 6 years), while LDCS will do so in 8 years. NLDCs will reduce their tariffs for L.D.C. products to 0-5% in 3 years. This TLP would cover all tariff lines except those kept in the sensitive list (negative list) by the member states.

The salient features of the four Annexes of SAFTA Agreement are as under:


(i) Rules of Origin 


For giving preferential access to the Member Countries under SAFTA, the goods shall have undergone substantial manufacturing process in the exporting countries. The substantial manufacturing processes are defined in terms of twin criteria of Change of Tariff Heading (CTH) at four-digit Harmonized Coding System (HS) and value content of 40% (30% for LDCSs).


Apart from the general rules, SAFTA provides for Products-Specific Rules (PSR) for 191 tariff lines to accommodate the interest of LDCSs given their limited base for natural resources and undiversified industrial structure. The Products Specific Rules have been provided clearly on technical grounds i.e. where both inputs and outputs are at the same four-digit HS level.


Sensitive List or Negative List


The summary of the Sensitive Lists are as under:




S. No


Participating countries


No. of Tariff Lines for LDCS


No. of Tariff Lines for NLDCS


Consolidated List


1




Bangladesh




1249




1254




--




2




Bhutan




--




--




137




3




India




744




865




--




4




Maldives




--




--




671




5




Nepal




--




--




1335




6




Pakistan




--




--




1183




7




Sri Lanka




--




--




1065






As can be seen above, the Negative List for Sri Lanka with regard to India is 865 (much larger than under the ISFTA where is it 429 tariff lines only). The Negative List for India with regard to Sri Lanka is 1065 tariff lines which is somewhat smaller than 1180 tariff lines under the ISFTA. However, in real terms the value of SAFTA benefits as incremental to ISFTA is marginal for both countries. There are a total of 139 items in Sri Lanka's Negative List under the ISFTA that are absent from the Sri Lanka's list under SAFTA. Zero duty benefits under these are, therefore, available to Indian exporters.




Comprehensive Economic Partnership Agreement (CEPA)


Following the FTA, the two Governments emboldened by the positive outcomes and success of the FTA, felt that more action was required to unleash the full potential of our bilateral economic relations. Accordingly, during the visit of Prime Minister of Sri Lanka to India in June 2002, the two governments decided to set up a Joint Study Group to explore possibilities of starting negotiations for a CEPA, modeled on the India-Singapore CECA. Based on the report of the JSG in October 2003, the two countries began negotiations on a CEPA in early 2005. Thirteen rounds of negotiations have been completed, the last round having been held in Colombo on July 8, 2008. Following the last technical level meeting, the Commerce Secretaries of the two countries met on July 9, 2008 to finalize the remaining issues and officially declared that CEPA negotiations have been completed. However, the agreement is yet to be signed. CEPA seeks to build on the momentum generated by the FTA and take the two economies beyond trade in goods towards greater integration and impart renewed impetus and synergy to bilateral economic interaction. The discussion on CEPA has resumed in December 2010. The salient features of CEPA as presently negotiate include:


Incremental measures to reduce the negative lists of both countries and to deepen the tariff liberalization programme contained in FTA.



Additional concessions in garments and textiles sectors by India.



There is a proposal to create new Product Specific Derogations (PSRs) for a large number of Sri Lankan products by easing the rules of origin norms criteria for a range of products. This was to address concerns among some exporters in Sri Lanka who felt that the FTA rules of origin criteria were far too stringent leading to effective denial of export possibility. Some of the products likely to be included are apparel items, jewellery, furniture, machineries, electrical and other appliances, agricultural and agro-processed items, fishery products, non-ferrous metals, and so on.



Revise the provisions of Rules of Origin and Operational Certification Procedures in keeping with progress on these issues in SAFTA and other FTAs.



Commitment to identify and root out all non-tariff barriers;



Provision for a close cooperation mechanism between the Customs Authorities; for transparency of laws, rules and regulations through prompt publication, adoption of risk management techniques to allow expeditious clearance to low risk consignments, adoption of paperless trading methods, adoption of advance ruling system etc.



Provision for a Mutual Recognition Agreement (MRA) as well as stipulation to adopt common Sanitary and Phyto-sanitary Standards (SPS). This measure is aimed at dealing with delays due to lab testing and certification processes. Testing and certification done in Sri Lanka or India would be recognized in each other's country. The products that will benefit include: ayurvedic products, fish and fishery products, coffee, tea and spices, edible fruits and nuts, vegetable fats and oils, all kinds of animal and animal products, plant and products of plant origin, and other agricultural and related items.



The main new opening in CEPA would be the inclusion of trade in services. A positive list approach as under WTO would be followed and reflected in the Schedule of Commitments of both countries. Like in the trade in goods covered under FTA, there would larger and deeper openings by India than by Sri Lanka. India will open far more sectors upfront and grant deeper concessions in each of these areas. In return, Sri Lanka will adopt a more gradual approach, open only selected areas and restrict openings in these sectors to levels it is comfortable with.



The Agreement will also update the Bilateral Investment Protection and Promotion Agreement (BIPPA). It will contain a schedule of commitment on investments which would larger for India than for Sri Lanka.



Provision for bi-annual meetings at the level of Commerce Secretaries and annual meeting of the Commerce Ministers to deal with unresolved issues and to ensure that all concerns are addressed at a very high level and on a regular basis.



Provision of dispute resolution mechanism for redressal through non-governmental means by providing for arbitration.



Provides for economic cooperation in a wide range of areas. These include: Energy; Manufacturing; Services; Transport and infrastructure; Science and technology; Human resource development; and SMEs. This would help in creating capacities and developing human resource potential in Sri Lanka to better leverage the new openings envisaged in CEPA.





During the 8th session of India-Sri Lanka Joint Commission held in January 2013 at New Delhi, both countries have agreed to hold intensive consultations towards forging a special economic partnership for comprehensive and sustained economic cooperation.



BILATERAL TRADE


Bilateral Trade Figures (US$ Million)




Year


Imports from India


Exports to India


Total Trade


Trade Deficit for Sri Lanka


EXIM Ratio

SL Imports:

SL Exports


All figures in US $ million, (FTA implemented in March 2000)




1999




512




49




561




-463




10.4:1




2000




600




58




658




-542




10.3:1




2001




602




72




674




-530




8.4:1




2002




835




171




1006




-664




4.9:1




2003




1076




241




1317




-835




4.5:1




2004




1358




385




1743




-973




3.5:1




2005




1399




559




1959




-840




2.5:1




2006




1805




489




2295




-1316




3.7:1




2007




2784




516




3300




-2268




5.4:1




2008




3007




418




3425




-2589




7.2:1




2009




1710




325




2035




-1385




5.3:1




2010




2546




474




3020




-2073




5.4:1




2011




4397




522




4919




-3875




8.4:1




2012




3484




519




4003




-2965




6.7:1






Source: Sri Lanka Customs










Percentage of Total Sri Lanka Trade with India




Year


Exports (%)


Imports (%)


2002




3.57




13.81




2003




4.79




16.49




2004




6.84




17.25




2005




9.08




16.84




2006




7.25




18.51




2007




6.82




24.44




2008




5.10




21.99




2009




4.56




18.13




2010




5.77




21.03




2011




5.07




22.42




2012




5.69




19.52






SRI LANKAN EXPORTS TO INDIA


Top ten Articles exported to India from Sri Lanka - 2012




S.No


HS Code


Description


% Share


US$M.


1




23099030




Residues and waste from the food industries, prepared animal fodder.




8.56




44.39




2




860900




Railway or tramway locomotives, rolling stock and parts thereof;




6.62




34.34




3




854430




Electrical machinery and equipment and parts thereof; sound recorders




5.58




28.95




4




09041110




Coffee, tea, mate and spices




5.19




26.91




5




890190




Ships, boats and floating structures.




5.09




26.42




6




680221




Articles of stone, plaster, cement, asbestos, mica or similar materials




3.21




16.63




7




84185090




Neuclear reactors, boilers, machinery and mechanical appliances, parts




3.09




16.01




8




23024010




Residues and waste from the food industries, prepared animal fodder.




2.93




15.20




9




470790




Pulp of wod or of other fibrous cellulosic materials waste & scrap of paper




2.84




14.75




10




180310




Cocoa & cocoa preparations




2.47




12.81












Others




54.43




282.31












Total




100.00




518.71








SRI LANKAN IMPORTS FROM INDIA


Top ten Articles exported to Sri Lanka from India - 2012




S.No


HS Code


Description


% Share


US$M.


1




27101120




Mineral fuels, mineral oils and products of their distillation; bituminous




5.87




204.49




2




27101940




Mineral fuels, mineral oils and products of their distillation; bituminous




5.42




188.95




3




17019910




Suger & suger confectionery




5.29




184.29




4




30049090




Pharmaceutical products




4.30




149.92




5




87032154




Vehicles other than railway or tramway rolling-stock, and parts and acce




3.71




129.32




6




25232930




Salt; sulphur; earths and stone; plastering materials, lime and cement




3.48




121.09




7




87112010




Vehicles other than railway or tramway rolling-stock, and parts and acce




3.45




120.04




8




87042210




Vehicles other than railway or tramway rolling-stock, and parts and acce




3.09




107.56




9




87042161




Vehicles other than railway or tramway rolling-stock, and parts and acce




2.98




103.77




10




27101960




Mineral fuels, mineral oils and products of their distillation; bituminous




2.43




84.65












Others




59.98




2089.65












Total




100.00




3483.74






India´s Exports 2012






INVESTMENTS 


According to figures of Board of Investment of Sri Lanka (BOI), in 2012 India is among the fourth largest overall investors in Sri Lanka with total investments in the vicinity of US$ 160 million. In 2011 total FDI from India to Sri Lanka was about 147 million USD and India was on second place behind Mauritius (253 million USD). India was the largest foreign direct investor in Sri Lanka in 2010 with US$ 110 million followed by Malaysia with US$ 73 million and the United Arab Emirates US$ 66 million.








Year


FDI from India


Total FDI


Rank


2003




53.81




158.35




1




2004




25.23




214.00




4




2005




17.86




249.02




4




2006




27.05




506.20




9




2007




42.88




644.70




4




2008




126.00




779.00




2




2009




78.00




601.00




3




2010




110.20




516.30




1




2011




147.00




1067.00




2




2012 (Jan-Sep)




211.86




614.50




4








Source: Sri Lanka Board of Investment




Several Indian companies have planned investments in Sri Lanka in the coming years, including ITC Ltd, Tata Housing, Shree Renuka Sugars, Dabur India Ltd, etc. Indian companies like Godrej, Bajaj, Tata & Dabur are a household name in Sri Lanka. Likewise, investments by Sri Lankan companies in India too are surging, as Sri Lankan businesses take advantage of India's dynamic economy and large market.


MAIN INDIAN INVESTMENTS ARE:


1) Lanka IOC PLC



Lanka IOC PLC is a public liability company listed in the Colombo Stock Exchange with a turnover of SLRs 51.74 billion with a net profit after tax of SL Rs 876 million. LIOC holds one-third share in Ceylon Petroleum Storage Terminals Ltd, the Common User Facility in Sri Lanka for storage and distribution of petroleum products. LIOC is making phased investments to provide world-class quality petroleum products and services. Lanka IOC has invested approx USD 95 million.




2) Bharti Airtel Lanka




Bharti Airtel Lanka is a subsidiary of Bharti Airtel and commenced commercial operation of services on January 12, 2009 and now has an aggregate of over 1 million customers, and is Sri Lanka's fastest growing wireless operator. It was granted a license in 2007, in accordance with the Sri Lanka Telecommunications Act No. 25 of 1991. Under the license, the company provides digital mobile services to Sri Lanka inclusive of voice telephony; voice mail, data services and GSM based services. The approx investment by Airtel is about US $ 200 million.




3) Piramal Glass Ceylon





Piramal Glass Ceylon (PGC) is a venture of Piramal Enterprise Ltd of Mumbai India, in Glass Container for Packaging. It has stemmed out of Ceylon Glass Company, which was acquired by Gujarat Glass Pvt Ltd (part of Piramal Enterprises Limited) in the year 1999-2000. It was renamed as PGC in 2008. Gujarat Glass Pvt Ltd (GGPL) currently holds 54% of the equity of Piramal Glass Ceylon Plc. The approx investment by Piramal Glass Ceylon is US $ 55 million.




4) Taj Hotels




The presence of Taj Hotels, Resorts and Palaces in Sri Lanka spans over a quarter of a century and is represented today by three properties- Taj Samudra, Colombo located in Colombo, Vivanta by Taj, Bentota - beach resort on the south west coast and The Gateway Hotel - Airport Garden, Colombo.






5) UltraTech Cement



UltraTech's bulk cement terminal in Sri Lanka is located at Colombo. Existing plant capacity is 0.6 MTPA with initial investment of 11 million USD and is set to increase to 1.2 MTPA by end of 2011 after completion of ongoing expansion project worth 2.3 million USD. The current turnover of UltraTech-Sri Lanka is 59 million USD and is expected to reach 110 million USD by 2013/14.




6) J.V.Gokal Ceylon Private Limited




It was established in June 2003 for export of value added Teas from Sri Lanka. The investment to date is USD 5.5 Million. J.V.Gokal Ceylon is a part of the Indian Mumbai headquartered J.V.Gokal & Company. The company exports Black, Green and Flavoured Tea Bags under brand SUPER TEA and other private labels to around 31 countries around the world from Sri Lanka.




7) Tata Communications Lanka Limited


Tata Communications Lanka Limited was incorporated in June 2003 and obtained an External Gateway Operator License (EGO). The company commenced operations in February 2004. The company has created a niche for itself for catering to the global telecommunication needs of customers in Sri Lanka. It launched its second gateway in April 2011.




8) Banks from India


State Bank of India, Indian Bank, Indian Overseas Bank and ICICI Bank are operating in Colombo, Sri Lanka. State Bank's Sri Lankan operations started way back in 1864 and it is one of the oldest banks in the country. State Bank of India has a branch in Kandy and it is likely to open a branch in Jaffna. Indian Bank opened a branch in Jaffna in January 2011. ICICI Bank Limited commenced banking operations in Sri Lanka through a branch office on January 16, 2006. Axis Bank, India's third largest private sector bank, launched its Sri Lankan operations with the inauguration of the Colombo branch on 21st October, 2011. Axis Bank is the fifth Indian bank to enter Sri Lanka.




9) Asian Paints (Lanka) Limited



Asian Paints (Lanka) Limited is the second largest paint company in Sri Lanka, manufacturing complete range of Protective and Decorative Coatings. The unit began operations in 1999 by acquiring Delmege Forsyth and Co. (Paints) and was later renamed to Asian Paints (Lanka) Ltd in Sept 2000.




10) CEAT -Kelani Associated Holdings (Pvt) Ltd


CEAT - Kelani began as a joint venture of CEAT India Ltd, Associated Motor Ways PLC & Kelani Tyres PLC and is the largest tyre manufacturer in Sri Lanka. It is a dominant player in Sri Lanka's domestic tyre market, with a share of over 60% in the truck and light truck sector. The company is also a market leader in the farm and three-wheeler sectors in Sri Lanka, and has the largest dealer network on the island. It exports to 14 countries in the world and is the first local tyre manufacturing entity to obtain ISO 9000 certification.




11) MphasiS Sri Lanka



MphasiS Sri Lanka became operational in September 2010. The company plans to hire over 2000 people in the next 3 years in Sri Lanka. The center will join MphasiS' network of Global Delivery centers providing Applications, BPO and ITO services to clients world-wide.




12) Lanka Ashok Leyland


Lanka Ashok Leyland was incorporated in 1982 as a Public Limited Liability Company and started its operations in 1983 as a Joint venture between Lanka Leyland Ltd (a wholly owned company of Government of Sri Lanka) and Ashok Leyland Ltd India, to carry out the business of importation of Ashok Leyland commercial vehicles in knock down condition or fully built and carry out assembly operations, repair and service, body building on chassis and other developments to progressively develop ancillary industries locally.




13) L&T Infrastructure Development Projects´ project in Colombo


L&T Infrastructure Development Projects (Lanka) Pvt. Ltd., is a Special Purpose vehicle formed in 2006 to implement a Joint Venture agreement with National Housing Board of Sri Lanka to develop the Iconic Diamond Tower Project, a mixed development urban infrastructure project, situated on Darley Road. This Board of Investment approved project has already secured land and obtained all permissions including Colombo Municipal Corporation's approval of construction drawings. Soil testing and test piling have also been completed.




14) Dabur Lanka Pvt. Ltd



Dabur has set up Dabur Lanka Pvt. Ltd in Sri Lanka. The new plant will be set up at Gampaha, north of Colombo by Sep'12. Spread over 50 acres it will have the capacity to produce 2.8 lakh cases of fruit-based beverages per month and will be export-oriented. The investment plan in the coming 3 years is around Rs.125cr of which about Rs.70 cr will go in on setting up the new manufacturing facility. The plant, once operational, will employ approximately 75 people, and the intention is to increase the number gradually to around 200 by 2013-14.




15) Tata Housing



A memorandum of understanding was signed between Urban Development Authority (UDA) of Sri Lanka and TATA Housing & SG18 of India on 15 March, 2012 for Slave Island Development Project in Colombo. On 28 April, 2012 Indian companies, Tata Housing & SG 18 in cooperation with Urban Development Authority of Sri Lankan (UDA) launched an awareness programme for the project. The total estimated cost of the project will be approx $400 million USD. The project is proposed to be constructed in two or three phasesphases and shall be completed in 8-10 years from the date of receipt of all the required approvals.




16) Welcome Hotels Lanka Private Limited 



ITC Limited (ITC), a multi-business Indian private sector conglomerate with a market capitalization of over US $ 35 billion and a Turnover of around US$7 billion with business interests spanning Consumer Goods, Hotels, Paper & Packaging, Agri-Business and Information Technology, has incorporated a wholly owned subsidiary - Welcome Hotels Lanka Private Limited (WLPL) in Sri Lanka. WLPL has acquired land at Galle Face in Colombo on a 99-year lease from the Board of Investment of Sri Lanka with an intention to set up a mixed use project, including a luxury hotel. The exact nature of the project is being decided.




17) Indocean Developers Private Limited




Indocean Developers (Private) Ltd, a company of South City Projects (Kolkata) Limited (SCPKL), has acquired two-acres of land opposite the Beira Lake in Colombo for a residential and commercial development project known as Altair Project (or Altair) with an estaimated investment of US$ 400 million. Indocean Developers Pvt. Ltd has 150 years of real estate development experience with more than 10 million sq. feet of development to its credit, some of which are the South City Mall, South City Garden and South City Pinnacle. The company prides itself in contributing to the environment using world-class development methods which will redefine the entire skyline of the city of Colombo. At 68 stories and 240m, the building will be the tallest residential building in Colombo when it is completed. As of January 2013, piling is in progress.




18) Shree Renuka Sugars Ltd



India's No 1 sugar company, Shree Renuka Sugars Limited, has signed an agreement with the Board of Investment of Sri Lanka to invest US$ 220 Mn to set up a sugar refinery complex in Hambantota. The company participated in the bidding process in 2010 and was selected and later approved by the Sri Lankan Cabinet to set up the proposed sugar refinery. Shree Renuka Sugars Limited, is the largest sugar company in India and has also 4 sugar mills in Brazil. The proposed project, plans to bring inedible raw sugar from Brazil in bulk and add value locally by refining it in the complex. The refined sugar would be sold locally as well as exported from Hambantota Port. The Sugar Refinery would have a world scale capacity and contribute to over a million MT of cargo movement to the Hambantota Port. Apart from paying royalty and lease rental to the Sri Lanka Ports Authority, the Project would result in saving for the country.




(19) Krrish Group 


On 3 September 2012, the Board of Investment (BOI) of Sri Lanka signed an agreement with Krrish Group of New Delhi for a US$ 460 million (approx. Rs. 60 billion) project for mixed-development tower complex. Krrish Group will build a sprawling complex that will consist of four 80-storey towers at Transworks Square in the Fort District of Colombo. The project is for a mixed development complex which will include high-end residential apartments, luxury hotel and office space. The 4.3 acre land will be provided to the investor under a 99-year lease at a rental of SLR 4.9 billion (US$ 37.1 million).




(20) Trimax data centre in Hambantota




India based Trimax IT Infrastructure and Services Ltd. signed a memorandum of understanding on 28 November 2012 with the Ministry of Telecommunication and Information Technology to invest Rs. 3,500 million to develop a data centre at the proposed IT Park in Hambantota. The proposed data centre, which will be developed in 10 acres of government owned land leased by Trimax, is expected attract 100 investors who would invest more than US$ 5,000 million generating 100,000 direct and indirect employment opportunities. The Board of Investment (BOI) would grant Trimax a 12 year tax holiday for the investment which would change the landscape in Hambantota, according to BOI Chairman/ Director General M. M. C. Ferdinando. "The data centre would provide shared, secured and managed infrastructure for consolidating and hosting national level applications with a view to providing government-to-government, government-to-citizen and government-to-business services which would be fast, efficient, trustworthy and also provide a managed environment for citizens and businesses to conduct secure transactions."




SRI LANKAN INVESTMENTS 


The last few years have also witnessed an increasing trend of Sri Lankan investments into India. Main Sri Lankan investments in India include Ceylon Biscuits (Munchee brand), Carsons Cumberbatch (Carlsberg), Brandix (approx US$ 1 billion to set up a garment city in Vizag), MAS holdings, John Keels, Hayleys, and Aitken Spence (Hotels). There are also investments in the freight servicing and logistics sector from services industry.


Main Sri Lankan investments in India:


Lion Brewery has signed a joint venture agreement with Carlsberg International to venture into India, to take advantage of the market opportunities arising from the growth in the Indian consumer market. The progress of this joint venture in India has been impressive. The Company now operates 4 breweries, one each in Maharashtra, Rajasthan, Himachal and Kolkata. Lion will hold a 22.5% stake in the Indian JV company.








Brandix Sri Lanka, one of the largest Sri Lankan apparel companies, are involved in the development of a 1000 acre SEZ at Vishakapatnam aimed at setting up a fully integrated ´Apparel City´. The development is based on ´Fibre-to-Store´ concept and seeks to eventually draw investments of about US $ 1 billion and employment for 60,000 people.






Aitken Spence has ventured into the Indian hospitality industry with is “Heritance”" brand of hotels having bagged management contracts for five hotels in India: (i) Poovar Island Resort, Trivandrum; (ii) Barefoot at Havelock, Andaman Islands; (iii) Heritance Madurai; (iv) Tamara, Coimbatore and (v) Hotel Atithi, Puducherry. It has bagged many other management deals in India, including four hotels in Delhi, many of which are currently under construction.






Ceylon Biscuits has invested in a property in Patiala to manufacture its Munchee Brand of biscuits in India. The project has suffered due to litigation with original owners and is currently the matter is sub-judice




John Keells Logistics India Private Limited (JKLI) ) is a fully owned subsidiary of John Keells Holdings PLC. A multimodal logistics service provider JKLI offers Ocean and Air Freight (Imports and Exports), Inland Transportation and Customs Clearance as well as handling of Project Cargo. With offices in most major metros - Bangalore, Chennai, Cochin , Coimbatore , Delhi , Mumbai and representative offices in other cities the company handles international as well as inter and intrastate logistics requirements.






John Keells Foods India Pvt Ltd (JKFIL), is fully owned subsidiary of John Keells Holdings PLC´s Keells Food Products PLC (KFP) of Sri Lanka. It started operations in 2008 to manufacture and market processed meats, including a wide range of ready-to-serve Chicken, Pork, Fish and Mutton products. The products of JKFIL are targeted at key metro cities across India.




Amante, a subsidiary of MAS Holdings was launched in India in 2007. Amante, exclusively launched lingerie brand in India by MAS is currently sold in 233 retail outlets across 22 Indian states and was voted as "Product of the Year" in an AC Nielsen survey in March 2010.






Linkages between Business Chambers 


There are healthy linkages between the business chambers of the two countries. The Confederation of Indian Industry (CII) has an MoU with The Ceylon Chamber of Commerce. The Federation of Chambers of Commerce and Industry of India (FICCI) partners the FCCISL under which a Joint India-Sri Lanka Business Council functions. An exclusive Indo-Sri Lanka Chamber of Commerce and Industry was inaugurated by Shri P. Chidambaram, the then Finance Minister in September 2006.


The first meeting of India-Sri Lanka CEOs Forum was held on 4 August, 2012 during the visit of Hon'ble Anand Sharma, Minister of Commerce, Industry and Textiles to Sri Lanka. The two sides prepared a joint report on the outcome of the meeting. Further follow up on various issues is being done by FICCI and the Ceylon Chamber of Commerce.


TOURISM 


Tourism also forms an important link between India and Sri Lanka and India is the largest source market for Sri Lankan tourism. In tourism, India is the largest contributor with every fifth tourist being from India. In 2012, out of the total 1005,605 tourists, 176,340 tourists visited from India showing an increase of 2.9% as compared to 2011 when, out of the total 855,975 tourists, 171,374 were from India, constituting 20.02%. Sri Lankan tourists too are among the top ten sources for the Indian tourism market. In 2012, over 200,000 visas were issued by the High Commission in Colombo to facilitate travel between India and Sri Lanka. Sri Lanka also is in the top ten countries from where tourist arrivals are registered in India.




OTHER ECONOMIC ENGAGEMENTS


Civil Aviation Agreement


Sri Lanka also enjoys a very special relationship with India in the field of civil aviation. It is the largest foreign airline operator to India. Both sides had a meeting in New Delhi on 20-21 April, 2011 under the framework of the Air-Services Agreement signed on 21 December, 1948. It was decided that the designated airlines of each side shall be entitled to operate 112 flights per week. In addition to the 112 frequency entitlements, the designated airlines of each side shall be entitled to operate any number of services with any type of aircraft with capacity not exceeding that of a B747 to/from points specified in their respective Route Schedule. During the meeting Indian side shared a revised Air Services Agreement with the Sri Lankan side.


S&T Co-operation


The first meeting of the India-Sri Lanka Joint Committee on Science & Technology was held at New Delhi on 22 September 2011. The Indian and Sri Lankan delegations were led respectively by Dr. Arabinda Mitra, Adviser and Head, Bilateral Cooperation Division, Department of Science & Technology, Government of India and Mrs. Dhara Wijayatilake, Secretary, Ministry of Technology Research, Government of Sri Lanka respectively. During the Joint Committee meeting, both sides agreed to step up bilateral cooperation in science and technology. The two sides signed a Programme of Cooperation in the Field Science & Technology for the period 2011-14. The Programme of Cooperation was reviewed during the second meeting of the Joint Committee on 18 April 2013.


MOU on Ferry Service


A Memorandum of Understanding (MoU) was signed on 7th January 2011 between India and Sri Lanka on Passenger Transportation by Sea. The MoU envisages putting in place ferry services between Colombo and Tuticorin and Talaimannar and Rameswaram. Resumption of these services signals an important step in the restoration of the traditional links between the two countries. The ferry service between Colombo and Tuticorin resumed operations on 13th June 2011, however, the operation has stopped since November 2011.


MOU on Agriculture


An MoU on cooperation in the field of Agriculture was signed on 17th January 2012 by H.E. Mr. Ashok K. Kantha, High Commissioner of India and Mr. W. Sakalasooriya, Secretary, Ministry of Agriculture, Government of Sri Lanka. Under the MoU, both sides shall promote development of cooperation in the fields of agricultural science and technology, agricultural production and agro-processing through joint activities, programmes, exchange of scientific materials, information and personnel.


MOU on Telecommunications


An MoU was signed on 17th January 2012 by Dr. J.S. Sarma, Chairman, Telecom Regulatory Authority of India (TRAI) and Mr. Anusha Palpita, Director General, Telecommunication Regulatory Commission of Sri Lanka (TRCSL). The MoU provides for establishing a mechanism of technical and institutional cooperation in the field of telecommunications, with the purpose of development of telecommunications in both the countries.


Lines of Credit


Government of India extended line of credit to Government of Sri Lanka for rehabilitation of the southern coastal railway corridor from Colombo to Matara in Sri Lanka. The project was implemented in two phases and involves renewal of track by IRCON and provision of training and rolling stocks by RITES. The total cost of the project is US$ 167.4 million, which has been provided as line of credit by the Export-Import Bank of India. The upgraded Galle-Matara rail track representing phase-I of the South coastal rail project between Colombo and Matara has been completed and was ceremonially opened in February 2011. The work on the phase- II of Southern railway line was completed on 11 April 2012 and formally handed over on 19 April, 2012.


Government of India also committed a line of credit for US$ 800 million for rehabilitation of Northern Railway in Sri Lanka. On 26 November 2010, a line of credit of US$ 416.39 million for the reconstruction of the railway lines in Northern Sri Lanka was signed to do the track laying work between the Omanthai-Pallai, Madhu -Tallaimannar and Medawachchiya- Madhu sectors.


Another line of credit Agreement of US dollars 382.37 million for the restoration of Northern Railway Services was signed by Mr. T.C.A. Ranganathan, Chairman and Managing Director, EXIM Bank of India and Dr. P.B. Jayasundera, Secretary, Ministry of Finance and Planning, Government of Sri Lanka on 17th January 2012. The Line of Credit will be used for track laying on the Pallai- Kankesanthurai railway line, setting up of signaling and telecommunications systems for the Northern railway line and supply of rolling stocks to Sri Lanka Railways.


Buyer´s Credit Agreement


Buyer´s Credit Agreement for US dollars 60.69 million was signed on 17th January 2012 by Mr. T.C.A. Ranganathan, Chairman and Managing Director, EXIM Bank of India and Dr. P.B. Jayasundera, Secretary, Ministry of Finance and Planning, Government of Sri Lanka for financing Greater Dambulla Water Supply Project for supply, erection and commissioning of water treatment plant and distribution across Dambulla region in Sri Lanka. The project is under implementation.


PROJECTS UNDER IMPLEMENTATION UNDER CREDIT LINES



Reconstruction of Southern Railway under a $167.4 million Line of Credit


The following projects with regard to reconstruction of Southern Railway line has been completed: Track laying on the Kalutara-Galle and Galle-Matara; (Galle-Matara completed)


Track-laying in the Colombo-Kalutara sector;


Supply of rolling stock


Training to SLR personnel and setting up of a maintenance facility.








Reconstruction of Northern Railway Lines under $800 million Line of Credit


Omanthai-Pallai($185.35 mn) - construction underwayy


Madhu-Talaimannar($149.74 mn) - construction underway


Medawachchiya-Madhu ($81.30 mn) - Completed on 23.3.2013


Pallai-KKS ($150 mn approx.) construction underway


Construction of Signaling and Telecommunications Network ($ 86.50 mn) - construction underway


Supply of Rolling Stock









OTHER MAJOR PROJECTS


Rehabilitation of Kankensanthuari Harbour: Aimed at restoring critical infrastructure in the north that will also help connectivity as well as regional and domestic connectivity. Being implement in multiple phases:


Hydrographic check survey [Completed].


Wreck removal [Completed].


Dredging of harbour and approach channel [completed.]


Repair and strengthening of breakwater. [ to be taken up]


Construction of new pier.[ to be taken up]


Final survey and publication of harbour chart.






Stages 1, 2, 3 and 6 under grant; 4 and 5 under an Indian Line of Credit.




* Palaly Airfield: Proposal to assist GoSL in rehabilitation of Palaly airfield and its utilization as a domestic/regional airport. India will assist by providing a grant as well as a loan.















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