By: Staff Writer
Colombo (LNW): The Government is taking every possible step to attract more foreign direct investment into the country lobbying Indian investors to start joint ventures in the island.
Sri Lanka is expecting foreign direct investment inflows to rise by a fifth to US$1.3 billion this year, a government official said with India likely to play a lead role despite the Sri Lankan economy facing its worst crisis in decades.
Continuing his discussions with senior Indian private sector figures, Sri Lanka’s High Commissioner to India Milinda Moragoda held a meeting in New Delhi with the Federation of Indian Chambers of Commerce and Industry (FICCI) President Subhrakant Panda.
Panda, who is also the Managing Director of Indian Metals & Ferro Alloys Ltd. (IMFA), India’s foremost fully integrated producer of value-added ferro chrome, engaged in fruitful discussions with High Commissioner Moragoda.
Panda and the High Commissioner of Sri Lanka discussed a range of issues pertaining to possible cooperation between FICCI, Trade Chambers in Sri Lanka and the Sri Lanka High Commission.
The High Commissioner provided Panda with an update on the assistance provided by the Indian Government during the economic crisis.
Moreover, he underscored Sri Lanka’s current state of readiness to embrace large-scale investment from India. Panda shared valuable insights into FICCI’s rich history spanning 96 years, highlighting its vast network that encompasses not only India’s largest companies but also small and medium-sized enterprises (SMEs).
Both parties recognized the significance of targeted sector-specific investments, aiming for greater integration with the Indian economy. It was agreed to engage with Sri Lankan trade chambers and the High Commission to take this initiative further.
Although FDI inflow was pushed to the brink last year by power cuts, chronic shortages of fuel and food and soaring inflation, Sri Lanka managed to raise its FDI by 38% to $1.08 billion, data from the Board of Investment (BoI) showed.
Part of the bump came from India, which wants to keep China’s expansion in its neighbour in check. India’s Adani group signed up for two wind power plants worth $442 million last year.
In the first quarter, Sri Lanka has already received proposals worth $600 million, said BoI Director General Renuka Weerakone, with 22 new projects and six expansions.
“The acid test is really in what comes in, that is what really helps the economy,” she disclosed.Sri Lanka is banking on information technology, solar and wind, bunkering and mineral processing to attract investments.
India’s MCS Group has signed a $20 million deal for mineral processing, the largest Sri Lanka has received so far in 2023, Weerakone said.
“Japan is very interested in minerals, so is China,” she said. “The raw material we have is something we can really pitch to get new investments.”
Sri Lanka has untapped deposits of graphite, phosphate and other minerals to attract investors but policy frameworks are yet to be updated, creating a bottleneck for FDI, Weerakone added.
Over the last decade, China has invested about $3 billion in Sri Lanka, accounting for nearly a quarter of its FDI, while India made up about $1.3 billion. In the last two years, India took the lead, followed by the United Kingdom in 2022 and Netherlands in 2021.
