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The Board of Investment of Sri Lanka has said that an investment of nearly $200 million is likely to be made by about 75 Indian companies, in Sri Lanka, within the next 18 months. These projects are in the pipeline and awaiting final clearances from the Sri Lankan government.
According to C Ignatius, senior manager (promotion), BOISL, "India and Sri Lanka signed the Free Trade Agreement in 1998. However, it was only implemented from March 2000.
In the last four years, nearly $200 million have already been invested by Indian companies, either in the form of setting up franchisees or a fully-owned subsidiary in Sri Lanka. Currently, there are another 73 companies that are in the pipeline. We estimate an investment of $200 million from these companies within the next 18 months."
Ignatius was part of the visiting business delegation from Sri Lanka, which was hosted by the The Greater Mysore Chamber of Industry and the American Chamber of Commerce-Karnataka Chapter.
Expressing happiness that the Indo-Sri Lankan Free Trade Agreement has resulted in an increase of foreign direct investments in Sri Lanka, Ignatius said, "Investments by India in the last four years, exceed the total investments it made in Sri Lanka between 1990 and 2000."
Nearly 70-80 per cent of the Indian companies that have established their presence in Sri Lanka are from the manufacturing sector.
While Ignatius felt that the trend would continue in the near term, he added that the FTA had also resulted in Sri Lankan companies making a foray into the Indian market. These include companies like Ceylon Biscuits, John Keels Group among others.
"Other sectors that have shown signs of development as a result of FTA include air-conditioning, electronics, IT-enabled services including BPO, software development and housing development. The Bangalore-based Puravankara Group has just submitted a plan for housing development in Colombo," he said.
e-Sri Lanka, an Information Communication and Technology agency to promote ICT in Sri Lanka, was formed about two years ago. Last week, this agency received a loan of $53 million from the World Bank for its activities.
Considering this the most recent development, leaders of software companies, who were also part of the delegation, felt that time was ripe for Indian companies to foray into the Sri Lankan market.
"The IT and the BPO segment is just beginning to emerge in Sri Lanka. HSBC is in the process of opening a call center, which would be about 2,000-strong. With over 100 software companies, this industry is approximately $100 million in size. This industry has been growing at 40-48 per cent year-on-year. We feel the time is ripe for Indian companies to establish their plans in Sri Lanka," Dinesh B Saparamadu, who was also part of the delegation and who heads several software companies in Colombo, said.