Pathfinder Foundation study on Sri Lankan integration into Indian supply chains

The Pathfinder Foundation (PF) is commissioning a study to research into the potential for Sri Lankan firms to integrate into the supply chains of Indian companies, both vertically and horizontally.

The vertical integration, which occurs in modern manufacturing, enables producers to locate the sliced – up production process in more than one location across borders. Horizontal integration occurs in the case of service provision where complementary and supplementary processes are supplied across the borders. The study has received funding support from the India-Sri Lanka Foundation (ISLF).

The main objective of the study is to make an assessment of the potential of Sri Lanka to strengthen its integration into the supply chains of companies, both domestic and multinational, located in India.

This study has been prompted by the fact that while, intra-firm trade in Asia is the most dynamic element of the international trading system, Sri Lanka currently has a negligible presence in these supply chains. This suggests there should be considerable scope for Sri Lankan companies to identify niches where they are competitive in the dynamic Asian supply chains, particularly those of companies operating in India, which have the advantage of proximity.

The scope of the study is limited to an investigation of the information available through secondary data sources and interviews with key informants from both India and Sri Lanka in order to prepare the groundwork for an in-depth study on the issue.

The ISLF has been set up with the objective of fostering bilateral relations through the enhancement of economic, scientific, technical and cultural cooperation between India and Sri Lanka and to promote greater understanding between the people of the two countries. The PF has commissioned a well known academic economist to lead the study.