India remains a compelling opportunity for Sri Lanka

In my last week’s column, the importance of exploring emerging markets for Sri Lanka’s exports was analysed. Sri Lanka is well placed geographically to tap many of the emerging markets.

Some of the nearby markets may not even be described as fully emerging markets, but offer substantial potential for  Sri Lankan exports due to the comparatively large segment of high income  and middle  income earning population and some such markets will be analysed in future columns.

At Sri Lanka’s doorstep, is one of the biggest countries described as a leading emerging market - India. This is a market eyed by businesses right across the world due to its huge population, economic growth and the expanding high and middle income population. Sri Lanka is better placed than any other to expand its share in the Indian market not only because of its proximity, but also because of its historical, cultural and political ties in addition to being a Free Trade Agreement (FTA) partner. With preferential access through tariff advantages provided by the FTA, opportunities are many. In addition to the FTA opening up many a product in the goods sector, the Comprehensive Economic Partnership Agreement (CEPA) which is yet to be signed would have opened up opportunities for many in the service sector.  India’s impressive economic growth is being spearheaded by the services sector but it is no secret that India is facing skills shortage in a number of sectors where Sri Lanka has expertise. The longer we delay in finalising the CEPA, more the opportunities for other countries to move in faster.

Benefits of access to India are not solely confined to the giant neighbouring market. A closer look at the Free Trade Agreements (FTA) and partnership agreements signed by India would indicate that such agreements are spread right across the world -Africa, Europe, Far East etc. These agreements are liberalising access to markets right across the globe. Investment opportunities in India would provide access to those markets and such opportunities are attracting many a foreign investor to India. Even if one does not want to tap on such opportunities in other markets, harnessing even one state like South India which is the closest to Sri Lanka would be beneficial. An analysis of the success stories of some of the Sri Lankan businesses faring well in the Indian market would indicate that perseverance has paid off. Visionary Sri Lankan business leaders who understand the potential are gradually establishing themselves in India through investments. With targeted promotional measures, opportunities could be available to many more.

India today is vastly different to what it was on being tied down by bureaucratic obstacles. While much has yet to be achieved, the gradual liberalisation and reduction of non tariff barriers is showing positive impact on the Indian bureaucracy.

Opportunities in India are not only for exports. The quality of imports has also improved over the years. India’s impressive economic growth is not a bubble that would easily burst. International agencies forecast India to be a leader in global economic growth. The need of the hour is not to harp on the difficulties faced during the early implementation of the Indo Lanka FTA which were mostly teething problems, but to look to the future with a positive mindset and maximise on the numerous advantages that Sri Lanka has vis-a-vis other competitors trying to enter the Indian market.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)