By Sugeeswara Senadhira/Ceylon Today

The Indian Finance Minister and the Lankan President were on the same wavelength in the Sri Lanka Economic Summit 2020

Colombo, December 7: Responding positively to President Gotabaya Rajapaksa’s call for Indian investments in Sri Lanka, Indian Finance and Corporate Affairs Minister Nirmala Sitharaman said that the close geographic proximity and familiarity, which both nations enjoy, can result in greater investments.

Delivering the keynote address at the Sri Lanka Economic Summit 2020 hosted by the Ceylon Chamber of Commerce (CCC), Sitharaman assured that India will work together with Sri Lanka to strengthen each other’s economy, a move which will allow people from both nations to prosper.

I am happy to say that India shall engage with the Sri Lankan authorities to make sure meaningful assistance, and interventions are made, so that the economies of both countries can be developed simultaneously, and the benefits are shared among the people,” she said.

Sitharaman said that India’s ‘Atma Nirbhar Bharat Abhiyan’ and the vision of ‘Self-reliant Sri Lanka’, are synergistic and complementary and could be used to further consolidate the economic rejuvenation of both countries. Atma Nirbhar Bharat Abhiyan or Self-reliant India campaign is the vision of Prime Minister Narendra Modi. He outlined five pillars of Aatma Nirbhar Bharat – Economy, Infrastructure, Technology-driven Systema, Demography and Demand.

The Indian Finance Minister said that cooperation between India and Sri Lanka would be beneficial for a sustained growth so essential for people-centric development in both countries.

India has provided over USD 3.5 billion worth of infrastructure projects to Sri Lanka and currently over USD 100 million worth of projects are in progress. In addition, the India Reserve Bank of India was involved in a currency swap with Sri Lanka which will lead to more economic activity between the two countries. Sitharaman highlighted the importance of regulatory consistency and policy certainty for industry and private sector contacts to develop.

In his address, President Gotabaya Rajapaksa said that the focus of the government is on fostering investments. We must attract more Foreign Direct Investment and encourage more local investments to drive our economic growth. With this in view, the Government is bringing in new laws to fully protect investments. We are also committed to enhancing the ease of doing business in Sri Lanka, so that returns on investment can be generated faster. In this context, I must also note there have been several instances of projects, including some funded by foreign Governments that have stalled due to various reasons. Such delays are deeply problematic because they inhibit the benefits of these projects from reaching the people. They also create a negative picture about the way the country operates,” he said.

For several decades India was the largest foreign investor in Sri Lanka, until China increased investments to get to the top place. However, India remains in the top bracket with cumulative investments of around USD 1.239 billion in Sri Lanka. The investments are in diverse areas including petroleum retail, Information Technology, financial services, real estate, telecommunication, hospitality & tourism, banking and food processing, copper and other metal industries, tires, cement, glass manufacturing, and infrastructure development (railway, power, water supply).

Over the years, Sri Lankan investments in India too increased at a satisfactory rate. Major Sri Lankan investments in India include Brandix (about US$ 1 billion in a garment city in Visakhapatnam), MAS holdings, John Keels, Hayley’s, and Aitken Spence (Hotels), apart from other investments in the freight servicing and logistics sector.

There are healthy linkages between the business chambers of the two countries. Various Indian Chambers have signed MOUs with Sri Lankan Chambers to promote trade and economic relations, investments between India and Sri Lanka. Indian Chambers also participate extensively in the various trade fairs organized in Sri Lanka.

In a positive response to Sri Lanka’s call to increase Indian investments, Indian Finance Minister Sitharaman affirmed improved assistance to help the Government strengthen the national economy. India will take several meaningful steps to narrow the trade gap between the two countries. The trade balance is strongly in favour of India and we are currently addressing this to create a better mix between the two nations.”

She noted that the recent Sri Lanka’s 2021 budget has proposed many incentives for Foreign Direct Investments (FDI). The Government of India will also promote more Indian investments to Sri Lanka. She promised that the Ministry of Commerce and Industry, the Ministry of External Affairs, and her Ministry will work together with Indian manufacturers and investors to look at Sri Lanka to deepen trade.

Sri Lanka has strong bilateral trade and investment relations with India and also multilateral trade relations with South Asian Association for Regional Cooperation (SAARC). Trade between the two countries grew particularly rapidly after the entry into force of the India-Sri Lanka Free Trade Agreement in March 2000.

According to Sri Lankan Customs, bilateral trade during January – November 2019 amounted to USD 4.19 billion. During this period-exports from India to Sri Lanka were USD 3.49 billion, while exports from Sri Lanka to India were USD 0.70 billion.

The Ceylon Chamber of Commerce listed the main items of exports from Sri Lanka to India as Base Oil, Poultry feeds, Areca nuts, (waste and scrap) paper or paperboard, Pepper, Ignition Wiring Sets, Copper wire, Marble, travertine and alabaster. The main items of imports from India to Sri Lanka are: Gas oil/ Diesel, Motorcycles, Pharmaceutical Products, Portland cement, Semi finished products of Iron, military weapons, Fuel oil, Rice, Cement clinkers, Kerosene Type jet Fuel.

Sitharaman stressed that the private sector of India and Sri Lanka must engage with their respective Governments to identify opportunities and highlight the regulatory interventions required for facilitation. Thus all indications depict a positive outcome for substantial increase in Indo – Sri Lanka trade and investment cooperation.