Investments
According to latest figures Board of Investment (BOI) of Sri Lanka, India is among the top five overall investors in Sri Lanka. Investments from India picked up rapidly after the signing of the FTA. The FTA has spurred bilateral investments by capitalizing on the opportunities generated by the FTA and availing of the comparative advantages both countries possess. Total investments from India is estimated to be about US$ 400 million. Investment projects in various stages of implementation for which Sri Lankan Board of Investment approvals have been obtained involve an additional investment of approximately US$ 300 million.
During 2002 and 2003, India was the largest investor in Sri Lanka. However, investments slowed down subsequently as reflected in India’s 4th position in 2004, fifth in 2005 and ninth in 2006. In 2007, again investments from India rebounded, and India was placed at 4th position. In 2008, India was ranked second in 2008 among major investors into Sri Lanka.
|
Year
|
FDI (US$ Million)
|
% FDI from India
|
|
India
|
Rank
|
Total FDI into Sri Lanka
|
|
2003
|
54
|
1
|
158
|
34.2
|
|
2004
|
25
|
4
|
214
|
11.7
|
|
2005
|
18
|
4
|
249
|
7.2
|
|
2006
|
27
|
9
|
506
|
5.3
|
|
2007
|
43
|
4
|
645
|
6.7
|
|
2008
|
126
|
2
|
779
|
16.1
|
In recent years, main investments include petroleum retail, hospitals, telecom, vanaspati, copper and other metal industries and real estate development. During 2008, two major investments implemented included one by Bharati Airtel (US$ 200 million) in mobile telecommunication and Britannia in confectionary sector. Other main Indian investments include Lanka IOC, TATAs (Taj hotels, VSNL, Watawala tea plantations), Ultratech Cements, CEAT, Nicolas Piramal and Ashok Leyland. Among services, the main investors are the four banks (SBI, IOB, Indian Bank and ICICI), Rediffusion, LIC, Jet Airways, JetLite and Air India, besides HR and education companies like ICFAI and MAFOI.
Some of the success stories of Indian investment in manufacturing sector have been CEAT and Nicholas Piramal, who have taken over sick units, turned them around, expanded and are now earning profits. Another notable investment was by Lanka IOC, which entered the Sri Lankan market in Aug 2002 and revolutionized the retail petroleum sector. They have plans for further expansion and investments. Another success story has been the recent investment by Bharati Airtel that has led to a drastic reduction in mobile call rates, and in particular, of call rates between India and Sri Lanka, benefitting the consumer in Sri Lanka.
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 (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.
Development Cooperation with Sri Lanka
Power and Energy Sector
In the power sector, NTPC Ltd. is in discussion with Government of Sri Lanka to set up a 500 MW coal based thermal power plant in Trincomalee as a joint venture with Ceylon Electricity Board (CEB). An MoA was signed between NTPC, CEB and GoSL on December 29, 2006 at Colombo. The project would involve investments of US$ 500 million and would be implemented by a JV company to be formed with a stake of 50% each by NTPC and CEB. The JV agreement is in final stages of negotiation and is likely to be signed later this year.
Another power related project relates to setting up an interconnection of the electricity grid between India and Sri Lanka to enable Sri Lanka to source electricity from India. The two sides have set up a Steering Committee at Power Secretary level and a Task Force to carry out negotiations on the modalities of implementation. An MoU for conducting a feasibility study is ready for signature and is likely to be signed soon.
In the area of clean and non-conventional forms of energy, too, a project to provide electricity to a village in Monragela district was implemented and inaugurated in July 2009 as part of our cooperation within the ambit of SAARC. The project was funded fully by the Government of India and implemented by TATA BP Solar Ltd and Sri Lanka Sustainable Energy Authority. India and Sri Lanka are examining the possibility of implementing similar projects in other parts of Sri Lanka.
In addition, Lanka Indian Oil Corporation makes a significant contribution through its investments in Sri Lanka under which it operates 170 petrol pumps in Sri Lanka and has successfully raised money through an IPO to fund expansion of its activities, including the setting up of a lubes plant in Trincomalee with an investment of US$ 5 million.
Lines of Credit
India is also active in a number of areas of development cooperation. In the recent past three lines of credit were extended: US$ 100 million for capital goods, consumer durables, consultancy services and food items, US$ 31 million for supply of 300,000 MT of wheat and US$ 150 million for purchase of petroleum products. All these lines of credit have been fully utilized. Another line of credit of over US$ 100 million has been made available for first phase of the rehabilitation of the Colombo-Matara railway, damaged by the Tsunami. Another line of credit of US$ 67.4 million has been approved for the second phase of this project in November 2009. The project involves track laying, training, construction of maintenance sheds and supply of rolling stocks. Another line of credit of US$ 100 million for various purposes is under utilization at present. Sri Lanka would, therefore, seem to be recipient of a large proportion of our overall concessional line of credit offered internationally.
In addition, India is also considering a line of credit package to undertake various reconstruction projects in the Northern Province. We have already received a request from Sri Lanka for a Line of Credit for renovation of the Northern Railway lines and the proposal is under active consideration.
Grant assistance and Small Development Project
A number of development projects are implemented in Sri Lanka under ‘Aid to Sri Lanka’ funds of the Government of India, including those under SDP scheme in accordance with an MoU signed between the two countries in 2005. So far, GOI has financed establishment of 20 Nenasalas in 2007, and provided fishing boats and equipment to fishermen in Vaharai in 2008. India has also assisted with the establishment of a state of the art Centre for English Language Training in Peradeniya to train English teachers, which is now ready for inauguration. This is part of the larger Sri Lankan Presidential project to develop “English as a Life Skill”. As part of this project we have sent two groups of 40 Sri Lankan teacher trainers for training at EFLU in Hyderabad in 2008 and 2009 under the ITEC programme. India has also assisted in establishment of a vocational training centre in Puttalam and the project was completed in May 2009.
In the Central Province, India has assisted with supply of equipment and renovation of OT at Dickoya, and work is on for implementation of a project for construction of a 150-bed hospital at Dickoya. India has also supplied 4 state of the art ambulances, and implemented a cataract eye surgery programme for 1500 people in Central Province. Another project to set up a rural Vocational Training Centre has also been implemented which includes deputation of Indian trainers for carrying out the programmes at the Centre. Yet another project to establish a VTC at Nuwara Eliya is also under consideration. India has also gifted 20 mini-buses to a non-profit company set up by Ceylon Workers Congress (CWC) to help connect remote planatation areas with main transport routes. In view of the usefulness of this project, a proposal to gift another 20 buses is also under consideration. A proposal to grant 5 buses to educational and social institutions in the Central Province is also under consideration. India has also assisted with the upgradation of the educational infrastructure of the schools in the Central province including teachers’ training, and setting up of computer labs. India contributes to Ceylon Workers Education Trust (CEWET) that gives scholarships to children of estate workers. A proposal to set up a scheme within the ambit of CEWET to assist secondary level students to raise educational standards and to check high drop-out rates among the students in the upcountry plantation area is under consideration. Scholarships to about 20 English teacher trainers, separate from the programme for 40 teacher trainers mentioned above, from the Central province through ITEC has also been implemented in 2008 and is being continued in 2009. A proposal for assisting with supply of computers to the Prajashakti project of the Thondaman Foundation aiming to set up e-kiosks and to provide them with VSAT based internet connectivity is also under consideration.
In the Eastern Province, India has implemented a project to grant 10 buses to the Eastern Provincial Administration. Another lot of 10 more buses for educational and social institutions in the Eastern province is also under consideration. An innovative project to supply 10 buses for conversion into 5 rail-buses by the Sri Lankan Railways is also under implementation. These rail-buses are a low cost option to connect Trincomalee and Batticaloa and also to help both cities connect better with Colombo. The first rail-bus was flagged off at Batticaloa on 29 July 2009 by the High Commissioner of India and the Sri Lankan Minister of Transport. Based on the positive experience of assisting GoSL with establishment of 20 nenasalas in 2007, we have implemented another project to establish 20 nenasalas in the Eastern province. A project to assist with the setting up of a teaching facility in AYUSH in Eastern University at Trincomalee is under implementation. Projects for providing fishing equipment to cooperatives in the East and to supply of computers to educational institutions in Eastern Province are under consideration. In addition, a pilot project for creating gainful employment for women who were widowed during the years of conflict and to establish vocational training centres in Trincomalee and Batticaloa is also under consideration.
In the Northern Province, at the request of Government of Sri Lanka, India has supplied urgent medicine requirements in five lots since November 2008. In addition, India set up an Emergency Medical Unit at Pulmoddai in March 2009 to assist IDPs coming from the then war zone. As the war ended, this unit was shifted to Vavuniya (Zone 1 Menik Farms) in end-May 2009 at the request of the GoSL. The hospital was de-inducted on 31st August 2009 after it was felt that most of the urgent medical requirements of the IDPs had been met. The remaining medical supplies as well as the physical infrastructure of the hospital was handed over to the Government of Sri Lanka to continue to provide medical assistance to the IDPs. During its operation, the hospital had treated about 50,000 patients not only meeting fully the medical needs of the inhabitants of Zone 1, but also of those living in other zones. The hospital had also distributed free medicines and provided surgical facilities as required.
India has also assisted through urgent supplies of Family Packs to the IDPS that contain a variety of daily use items such as clothing, utensils, essential food packets, personal hygiene items and others. These have been effected in four installments: (a) 80,000 family packs sent on 13 November 2008; (b) 40,000 family packs sent on 22 April 2009; (c) 50,000 family packs received on 9 May 2009; and (d) 90,000 family packs on 8 August 2009. The total cost of the supplies would be about INR 381 million (US$ 8 million).
In order to assist the IDPs in their re-settlement process, at the request of the Government of Sri Lanka, India has supplied 2600 MT of GI sheets that would serve to create shelter units in Northern Sri Lanka. The total cost of this assistance amounts to about US$ 2.7 million. The process of distribution of these GI sheets is being carried out by GoSL in conjunction with ongoing resettlement of the IDPs. Approval has also been given to another supply of a similar quantity of GI sheets.
To facilitate quick re-settlement of the IDPs, we are also working with Government of Sri Lanka, to provide assistance to the demining of the contaminated areas in the north. Currently, four Indian demining teams fully financed by the Government of India are working in the northern province. Recently, three more teams have been added to the existing four teams to assist in speeding up the demining of the northern province. The total cost of all these teams would be about SLR 500 million.
In the field of agriculture, a proposal for a partnership programme with Government of Sri Lanka to implement projects with a view to effect an agricultural renewal of the Northern Province is being finalized. The Government of India, in the meantime, has supplied 20,000 individual packets of agriculture implements to resettling IDP farmers to assist them to resume cultivation. Supply of another 50,000 packs of agricultural implements is under consideration.
In the medical sector, a project to supply equipment to augment the facilities and to modernize them in the existing Jaffna Teaching Hospital is under implementation.
Other proposals under consideration or under implementation include projects to establish Vocational Training Centres in Jaffna and Vavuniya and later at Kilinochchii and Mullaitivu;Limb Refitment Project for the IDPs; solar power to identified villages where power grid connectivity is not available; establishment of about 20 nenasalas (e-learning centres); supply of fishing boats and equipment; assistance to educational sector and to newly elected Urban Councils through supply of mid-size buses and passenger vehicles; renovation of the Duriappa Stadium; construction of a Cultural Centre in Jaffna; and support to the Jaffna University and Ramanthan Institute of Fine Arts; rehabilitation of the Atchchuvely Industrial Zone and Restoration of the Point Pedro Commercial Harbour.
Capacity Building in Sri Lanka
India provides about 200 training slots for middle and higher level professionals under the ITEC, Colombo Plan and BIMSTEC schemes. These courses have proved immensely popular and have been utilized by Sri Lankan professionals in wide variety of areas such as entrepreneurship development, biotechnology, water resources, financial management etc. To assist in capacity building in agriculture, there are training programmes, scholarships, research projects and exchange of visits of farmers. 8 M.Sc. and 30 Ph.D. courses have awarded under this programme in 2009. Other specific education projects include upgradation of the educational infrastructure of the schools in the Central province including teachers’ training, and setting up of e-libraries and computer laboratories. In addition, scholarships are awarded annually to 100 Sri Lankan students each year under the Mahatma Gandhi Scholarship Scheme instituted last year. Another set of 75 scholarships is awarded by the High Commission of India to Sri Lankan nationals for pursuing under-graduate and post-graduate courses in various reputed institutes and universities in India.
