Considering growing ties with India and Sri Lanka and the acceleration in Indian investor interest in many sectors in Sri Lanka, the island nation has an unprecedented opportunity to gain economically by attracting Foreign Direct Investments (FDIs) from India in key sectors.
“Local companies can invest in businesses in India to leverage on synergies and natural strengths,” said Sri Lanka India Society President and Indian CEO Forum in Sri Lanka Vice President Kishore Reddy.
“The proximity of India to Sri Lanka offers an extraordinary opportunity for attracting investment into many aspects of the northern economy of the island. A case in point – is Hong Kong and China, and how Hong Kong fed off the sheer size and scale of China’s economy to power its economy. Thus far, Sri Lanka has been unable to derive the benefits on a similar scale to Hong Kong, however, the winds are blowing in the right direction presently. “
Big-ticket investments in Sri Lanka’s economy are the need of the hour. In recent times, Indian companies have announced major investments like the Colombo West International Terminal (CWIT) and the soon-to-launch ITC Ratnadipa Hotel in Colombo.
Moreover, India is investing in the construction of hybrid renewable energy systems on Nainativu, Delft (Neduntheevu), and Analaitivu islands situated in the Palk Bay, with a combined renewable energy capacity of 2,230 kilowatts and funded by a $11 million grant from the Indian Government. Indians also remain the largest and most consistent source of tourists for Sri Lanka. At a time when the national airline is urgently seeking investors, several Indian corporates have expressed interest and these should be perused.”
Free trade agreements are another pillar on which trade flows can be increased. The stalled Economic and Technical Cooperation Agreement (ETCA) between the two nations can be a game-changer for Sri Lanka with the right policies. Reddy who is also the Chairman of the Shine Lanka initiative which promotes pitching and attracting Indian investments in Sri Lanka said that India is one of the fastest-growing major economies in the world and it is time Sri Lanka harnessed some economic gains from its neighbour’s momentum.
“As the closest state in India, Tamil Nadu’s economy is set to be a US$1-trillion economy by 2034, which provides a lucrative opportunity for businesses all over Sri Lanka.”
A key turning point in the economic cooperation between India and Sri Lanka took place during the economic crisis when the former extended a dollar facility of US$4 billion to Sri Lanka to enable imports of fuel, cooking gas and other essentials.
