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Rediff.com  » Business » Sri Lanka keen on retail joint ventures

Sri Lanka keen on retail joint ventures

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September 02, 2005 14:30 IST

Sri Lanka wants India to allow joint ventures in the retail sector, increase foreign direct investment limit in hotels and restaurants beyond 51 per cent.

Lanka also wants an increase the number of flights to major Indian cities under the proposed Comprehensive Economic Partnership Agreement being finalised between the two countries.

The issues were raised during the third round of discussions on the proposed CEPA held recently in Sri Lanka.  Officials said Sri Lanka had requested that JVs in the retail sector be allowed as was allowed to Indian retailers in Sri Lanka.

"It was pointed out that Indian Oil Corporation, Godrej and Titan had been allowed joint ventures in retail," an official said.  Though India pointed out that the retail sector has not been opened, Sri Lanka still wanted some concessions to be included in CEPA.

In tourism, Sri Lanka sought an increase in the FDI limit of 51 per cent in hotels and restaurants. It also wanted India to relax the three-year lock-in period for repatriation of investment in this sector.

In the aviation sector, Sri Lanka said India should withdraw the 10.2 per cent service tax imposed on the entry of their airlines into India since no such tax is imposed by Lanka on Indian carriers.

"They also requested New Delhi to double the frequency of flights to Delhi, Mumbai, Bangalore, Hyderabad and Chennai," an official said.

In ports and shipping, Sri Lanka had proposed to offer special discounts to containers coming to and from India, to use Colombo as a trans-shipment hub. It also expressed interest in drawing Indian investment to develop Lankan ports in southern areas.

Regarding movement of natural persons or Mode 4, officials said Sri Lanka was not in favour of India's proposal to delink Mode 4 from Mode 3 (or commercial presence).

It has suggested that definitions of business visitors, service suppliers and professionals be similar to the definition adopted in the India-Singapore Comprehensive Economic Cooperation Agreement.

On Agenda

  • India has not opened up the retail sector, still Lanka wants some concessions.
  • Wants FDI limit in hotels and restaurants to be raised beyond 51%.
  • Seeks withdrawal of the 10.2 per cent service tax imposed on the entry of Lankan airlines into India.
Monica Gupta in New Delhi
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