SL seeks outsourcing tie ups with Indian IT firms

Sri Lanka has invited Indian ITES and BPO companies to invest in the island nation claiming that the country would provide competitive edge with its large talent pool of trained personnel available at lower costs.

"Indian companies can invest in Sri Lanka to outsource their projects here. We have a large talent pool of trained personnel available at lower costs. Outsourcing of projects here will significantly help Indian companies reduce operational costs as well as offset the effect of rupee appreciation against the dollar, G L Peiris, Sri Lankan Minister for export development and international trade said. He was addressing a conference organised by Ficci in Chennai.

He also invited Indian companies to make use of the Generalized System of Preferences (GSP) scheme, under which 7,200 products from Sri Lanka can be exported to the European Union without levy of duty.

"India does not have this scheme in force and Sri Lanka is the only country in South Asia to have this scheme in force."

Presently, Sri Lanka uses only 30 per cent of its permissible limits and hence there is huge opportunity for the Indian manufacturers to use at least a part of the remaining 70 per cent. Though India is also negotiating with the European Union for introducing this scheme, it will take some time to come into force, he added.

Peiris also said that Sri Lanka was seeking an extension of the GSP scheme term, which expires in 2008, for another three years, ie., upto 2011.

He pointed out that Indian companies such as the Tata Group, Bajaj Group, Hero Honda, TVS, Taj Hotels, and Apollo Hospitals were doing well in Sri Lanka and an increasing number of  Sri Lankan companies are making investments in India.

The bilateral trade between the two countries has grown sizeably in the last ten years. Total trade has risen almost five times from $523 million in 1996-97 to $ 2.6 billion in 2005-06.

The India-Sri Lanka Free Trade Agreement (ISLFTA signed in December 1998 and implemented in March 2000, has been a major impetus to bilateral trade which has increased at a CAGR of 30.6 per cent between 2000-01 and 2005-06 as against 1.3 per cent between 1996-97 and 1999-2000. India is the third largest foreign investor in Sri Lanka with total investment about $400 million over the last decade.

Peiris noted that India has become the third largest trading partner of Sri Lanka, after the US and the UK. Huge potential exists for further co-operation in the food processing sector and packaging sectors, he said.

Other sectors offering opportunities for co-operation are tourism, motion picture industry, pharma, hospitality and higher education, he added.