India’s Claridges explores prospects in Lankan hotel sector

New Delhi: The Delhi based Claridges Hotels could soon join the growing number of Indian companies investing in Sri Lanka.

President and Chief Executive Officer of Claridges Peter J. Leitgeb, told Business Line that one of the reasons for his frequent visits Sri Lanka was to seriously look at a “luxury business hotel” there.

Services is the most prominent sector for Indian investments in Sri Lanka. In 2010 Sri Lanka got $ 83.53 million as foreign direct investment (FDI) in the sector from India. In the first half of this year this figure $ 39.52 million.

According to the Sri Lanka Board of Investment (BoI) data, till this month 173 Indian companies were operating there either as 100 per cent Indian companies or as joint ventures.

During January-October this year, the Sri Lankan Government granted approvals to nine Indian projects with an estimated investment of $ 168 million. At least eight of these projects have begun commercial operations. This is a big jump as last year approvals were granted for 15 projects with a total estimated investment of $ 72 million.

Indian business interest in Sri Lanka can also be gauged from the fact that FDI from India has registered an upward swing over the last seven years. In 2005 FDI from India was $ 18 million which peaked in 2008 at $ 126 million. In the first half of this year this figure stands at $ 47 million.

 “Indians investors are showing interest in new sectors like information technology, infrastructure and education,” a BoI spokesperson from Colombo told Business Line, adding that it would not be possible to put a figure on the number of companies likely to invest in the country as several factors go in to taking these decisions.  The Sri Lankan High Commissioner to India Prasad Kariyawasam added that though the education sector was not yet open to outside investment, but when it did open up “we expect there will be big interest from India”.

Analysts cite the improved investment climate, regional and bilateral trade agreements and socio-economic and cultural bonds between India and Sri Lanka as the reasons for the Indian business community’s interest there.

Among the Indian companies already present in Sri Lanka are Bharati Airtel, Dabur, Britannia, Tata, Ultratech Cements, CEAT, Nicolas Piramal and Ashok Leyland. Besides, four banks –  SBI, IOB, Indian Bank and ICICI also have branches in the island nation.