Indian industrial investors are preparing for major investment moves in Sri Lankan projects, not only on mega-infrastructure ventures, but even on smaller outlays. India’s powerful Confederation of Indian Industry (CII), has for the first time, expressed its new investment and funding push on Sri Lankan infrastructure projects this week.
“Sri Lanka is turning out to be a preferred destination for Indian investors, due to its similar climate and close proximity to India. We are also keen on showcasing Indian expertise in Sri Lanka through large scale projects,” said Praful Kumar Mutha, (Director-Mohan Mutha Exports Ltd., Chennai), who was leading a Confederation of Indian Industry (CII)’s 10 member business delegation to Sri Lanka.
Director Praful Kumar, was meeting the Minister of Industry, Commerce, Resettlement of Protracted Displaced Persons, Cooperative Development, Skills Development and Vocational Training (ICTPDPCDSDVT) Rishad Bathiudeen on Tuesday, joined by the members of his delegation to Colombo. The Industry-led and industry-managed CII, is India’s second largest industry chamber with more than 9,100 direct and over 300,000 indirect membership of firms from 291 various national and regional bodies (private and public sectors, SMEs to multi nationals). CII is no stranger to Sri Lanka and its previous teams visiting Colombo, met with Minister Bathiudeen on several occasions.
“We are interested in securing large scale projects in Sri Lanka such as refineries, IT parks, desalinization plants, pharmaceutical zones, container terminals and vocational training facilities. Many mechanisms are available in India for funding of such large projects overseas.
We at CII could be a facilitator for such project funding in Sri Lanka as well. We could move in with funding from the Indian Exim Bank. The Buyers’ Credit (BC) project funding mechanism of Indian Exim Bank is one such method,” said Director Praful Kumar, adding: “Such funds are for Indian exporters entering into new foreign markets where deferred credit on medium or long term basis is more practical. Interest rates are also very low at LIBOR plus 1.25% (annual) for 8 years. We are not talking about funding that comes through the usual Line of Credit Agreement through which such projects as upgrading Sri Lankan Railways have been taking place. In Buyers’ Credit, project, execution is done by an Indian firm named the project exporter. Even though the fund recipient is an Indian company, the firms in the target country too benefit immensely. 75% of the material for the project needs to come from the Indian firm, but Sri Lankan contractors too could supply the labour and also the 25% material in the BC project.
Meanwhile, since March 2018, Sri Lanka has been placed in the Positive List of Countries for Buyer’s Credit under India’s National Export Insurance Account (NEIA), by India’s Export Credit Guarantee Corporation (ECGC). 80 countries have been graded in this list. Sri Lanka earned a place in the “Second positive group” (called A2) out of seven grades (other grades are A1, B1, B2, C1, C2 and D). The A2 ranking (out of all the seven) is an attractive positioning for Indian investors eager to enter Sri Lanka.
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