By: Staff Writer
April 10, Colombo (LNW): A recent statement by Janatha Vimukthi Peramuna (JVP) General Secretary Tilvin Silva has stirred political and economic debate in Sri Lanka. Silva claimed that the previous Ranil Wickremesinghe-led government, along with the Rajapaksa family, tried to sell the state-owned dairy company MILCO to India’s Amul.
He alleged this deal was halted thanks to the intervention of the current National People’s Power (NPP) administration, which raised the issue with Indian authorities.
Silva’s comments have sparked significant controversy, with economic analysts warning that such politically charged statements risk undermining decisions that lack transparent legal grounding or economic rationale. Critics suggest that the NPP government’s approach might be exposing itself to legal scrutiny due to the nature of the deal and its sudden discontinuation.
The agreement in question involved a collaborative effort between India’s National Dairy Development Board (NDDB), Gujarat Cooperative Milk Marketing Federation Ltd (which markets the Amul brand), and Sri Lanka’s Cargills (Ceylon) PLC.
Officially supported by the Indian government, the joint venture aimed to boost Sri Lanka’s dairy sector by increasing domestic milk production and reducing reliance on imports. The project was formalized during Indian External Affairs Minister Dr. S. Jaishankar’s visit to Colombo in October 2023, following a bilateral agreement signed in July 2023 between relevant ministries from both countries.
This initiative was seen as part of a broader effort to modernize Sri Lanka’s livestock industry and deepen economic ties between the two nations. However, after the change in Sri Lanka’s government in September 2024, the new administration chose to backtrack on the previous plan, citing a desire to independently develop the domestic dairy sector, particularly through revitalizing state-owned enterprises like MILCO.
Since then, no official statement has been released by the Indian government regarding the fate of the Amul-Cargills partnership under the new Sri Lankan leadership.
Legal experts emphasize that if the agreement was purely a private partnership between Cargills and Amul/NDDB, with no involvement of state-owned assets or guarantees, the Sri Lankan government cannot unilaterally cancel it.
Governments generally lack the authority to terminate private joint ventures unless such agreements involve state property, regulatory approvals, or public resources like land, tax benefits, or the involvement of institutions like MILCO or the National Livestock Development Board (NLDB).
In Sri Lanka’s legal system, any government action to obstruct or cancel a valid commercial contract must follow due legal process. Affected parties would be entitled to challenge such moves in court or through arbitration, particularly under contract or investment law.
The government could only intervene legally if there were breaches of national law, threats to public interest or national security, or if the agreement contradicted constitutional provisions or state policy. While a new government can shift its policy stance, it cannot invalidate existing agreements without just cause.
Ultimately, the Amul-Cargills controversy highlights the complex intersection of politics, law, and economics—and the risks governments face when policy decisions intersect with binding legal agreements.
