India - Sri Lanka Business Forum

temporary 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 defence, 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. During January-August 2015, the bilateral trade amounted to US$ 3.23 billion. Sri Lanka’s imports
from India amounted US$ 2,776.65 million and exports to India amounted US$ 454.42 million. During the year 2014, Sri Lanka continued to be one of the largest trading partners of India in South
Asia. According to Sri Lankan Customs trade data the bilateral trade amounted to US$ 4.6 billion in
2014. Sri Lanka’s imports from India amounted US$ 3,977.18 million and exports to India amounted
US$ 624.67 million registering an increase of 24.83% and 14.86% respectively as compared to
corresponding period of 2013. India had a share of 20.62% and 5.64% respectively in the global
imports and exports of Sri Lanka during 2014. It may be noted that in 2014 Sri Lanka’s exports to
India has reached a new peak of US$ 624.67 million which is the highest since the introduction of
ISLFTA in 2000. 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 80% 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. During January-June 2015, Indian Investment amounted to US$ 33.05 million out of total investments
of US$ 515.09 million in the country. In 2014, Indian Investment amounted to US$ 51.8 million out of
total investments of US$ 1616 million in the country. India emerged as the eighth largest overall
investor in Sri Lanka with investments of US$ 50.52 million in 2013. The main investments from India
are in the areas of petroleum retail, hospitals, telecom, real estate, telecommunication, hospitality &
tourism, banking and financial services, IT and food processing (tea & fruit juices). The notable Indian
investments committed in 2014 are as follows: i) ITC Ltd., hotel project (US$ 300 million) and ii) Tata
Housing project for real estate development (US$ 400 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 garment
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city in Vishakapatnam), MAS holdings, John Keells, Hayleys, Aitken Spence (Hotels), Ceylon Biscuits
(Munchee brand) and Carsons Cumberbatch (Carlsberg), 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. There has been resistance from some section of the Sri Lankan businessmen for concluding
Comprehensive Economic Partnership Agreement (CEPA) with India. There has been no progress for
finalization of the document since January 2011. In tourism India continued to be the largest source of tourists coming to Sri Lanka. The total number
of tourist arrivals from India to Sri Lanka during January-September 2015 was 220,907 i.e. approximately 16.8% of the total tourist arrival into Sri Lanka. In 2014, out of the total 1,527,153
tourists, 242,734 were from India and showing an increase of 16.25% compared to 2013. Sri Lankan
tourists too are among the top ten sources for the Indian tourism market. In 2014, more than one lakh
ninety five thousand visas were issued by the High Commission in Colombo to facilitate travel
between India and Sri Lanka.