Weighing Odds

May 25, 2006 (LBO) – Sri Lanka's excessive holidays, arbitrary salary increases and the government's reluctance to settle billions to India's main oil retailer, is turning out to be a stumbling block for Indians to invest here, officials said Thursday. Sri Lanka also wants more shipments of clothes in key categories and a relaxing of rules of origin on specific exports like jewellery from 35 percent value addition to about 25 percent. Sri Lanka, which hopes to raise a billion dollars in foreign investments this year, has being wooing her giant neighbour with a plethora of incentives and a bi-lateral trade pact.

While a free trade agreement between both nations which kicked in to gear in 2000, has opened the doors for Sri Lankans to invest and ship goods, Indians have also been quick to size up potential business opportunities.

As it stands, India is currently Sri Lanka's third largest export market, with around two billion dollars in bilateral trade and a trade balance in India's favour.

India is also the island's second largest investor, with investments of over 500 million dollars in the island.