Sri Lanka is changing fast. The markets wear a vibrant look and are thronged with consumers enjoying higher disposable income, roads have improved and there are more cars on the Lankan roads, a sign of rising prosperity.

There is also a visible air of optimism in the relations between India and Sri Lanka which, as President Maithripala Sirisena has signalled, was keen to elevate its bilateral engagement and take it to “greater heights”.

A testimony to this are four agreements signed between the two sides, the most significant being the agreement on Co-operation in the Peaceful Uses of Nuclear Energy. The breakthrough pact which imparts a new strategic element to the Indo-Lankan relations would facilitate cooperation in transfer and exchange of knowledge and expertise, sharing of resources, capacity building and training of personnel in peaceful uses of nuclear energy among others. The other three are an agreement on agricultural cooperation, a memorandum of understanding on Nalanda University and an MoU on cultural cooperation. All this spells out a lot of opportunities for cooperation between the private sector in both countries.

From India, we also need to see these as offshoots of a vigorous policy adopted by Prime Minister Narendra Modi of reaching out to neighbours to enhance regional economic integration. India is Sri Lanka's largest trading partner with a huge trade surplus and the Government is keen to extend support for a more balanced growth in trade in both directions and greater flow of Indian investments and tourists into Sri Lanka. Bilateral trade in 2013-14 amounted to US$ 5.3 billion, rising 12.8 per cent from the previous year. The growth which has seen rapid strides since the entry into force of the India-Sri Lanka Free Trade Agreement in March 2000, is, however, not commensurate with the potential. The Commerce Secretaries of both the countries are expected to meet soon to review trade ties and there are two reasons to hope for progress.

First, the Government led by Prime Minister Modi has embarked on a more vigorous agenda of reforms and growth with measures to cut red tape and liberalise foreign investment norms among others. These, alongwith a buoyant stock market have positioned India favourably among global investors and it would suit India at this time to draw a regional power like Lanka into exploring these opportunities.

Second, major powers have either initiated or are planning to carve out a framework of engagement with Sri Lanka that offers their firms access to this vibrant Asian market, for instance, Lanka’ $1.5 billion “port city” deal with China. While India remains among the four largest overall investors in Sri Lanka with cumulative investments of over US$ 800 million, Lankan investments have been a trickle. The priority therefore for India is to strategise well with long term interests in mind and focus on investments. We can already see some potential collaborations resulting in a win-win scenario both ways.

Prime Minister Modi has spoken about India’s intent to further improve air and sea connectivity between India and Sri Lanka. The two leaders have also discussed expansion of cooperation in the energy sector, both conventional and renewable.

Take manufacturing. The Modi Government’s flagship programme “Make In India” positions India strongly as a manufacturing destination with incentives in the form of simplification and rationalisation of existing rules and regulation and expeditious clearances. The Government has identified 25 sectors including automobile, textiles, bio-technology and ports for potential investments in manufacturing facilities and increased exports.

Then there are the huge possibilities of investing in infrastructure development in India and Sri Lanka. India’s ambitious road and industrial corridor projects and mission to create 100 smart cities are a great business proposition. In Sri Lanka, Government spending on projects to upgrade sea, road, power, aviation and telecom infrastructure and dire need for schools and healthcare facilities offer Indian industry a lucrative window to partner in the island’s socio-economic development.

Business ties have to be also about people-to-people connect which can be fostered through tourism. Both India and Sri Lanka have rich prospects with their richly diversified flora and fauna, scenic and historical spots. The hospitality sector, especially midsized hotels in Sri Lanka and setting up of training institutes for manpower required in this sector holds great promise for Indian companies. In December 2014, Indian tourists to Sri Lanka numbered 26,153 as against 22,559 in the corresponding period of the previous year, an increase of 15.93 per cent. Clearly, there is scope to do more.

Fulfilment of these objectives requires a strong human capital base. New Delhi and Colombo could join hands to encourage renowned Indian education institutes to set up branches in Sri Lanka and establish a regulatory framework to facilitate investments into higher education.

Clearly, India and Sri Lanka have demonstrated a mutual desire to scripting a new era of friendship. President Sirisena calls his visit to New Delhi a “remarkable milestone in taking India-Sri Lanka relations to a greater height” and Prime Minister Modi points to “a moment of an unprecedented opportunity to take our bilateral relations to a new level”. The pitch is now ready for a more engaging and robust partnership.

The writer is the President of Ficci

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