The Hindu : Tamil Nadu / Chennai News : “Service sector’s role in trade ties will increase”

Online edition of India's National Newspaper
Wednesday, Dec 19, 2007
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Tamil Nadu

Tamil Nadu - Chennai

“Service sector’s role in trade ties will increase”

Special Correspondent

Indian IT and ITES firms urged to invest in Sri Lanka

CHENNAI: Sri Lanka hopes that the Comprehensive Economic Partnership Agreement, which it negotiates with India, will help to increase the role of the service sector in the bilateral economic ties.

“What the FTA did for commodities, the CEPA can do for services,” G. L. Peiris, Sri Lankan Minister for Export Development and International Trade, said at a seminar organised by the Federation of Indian Chambers of Commerce and Industry here on Tuesday.

Since the FTA came into force, the bilateral trade has jumped from $557 million in 2000 to $2.7 billion in 2007, with the biggest sectors being petroleum products, metals and machinery, transport equipment and pharmaceuticals. But with the CEPA set to ease the movement of people and services between the two countries, Sri Lanka is pushing for collaboration with the Indian service industry as well, especially in the booming sectors of information technology and business process outsourcing.

Mr. Peiris listed the biggest advantage of such collaboration: skilled human resources available at lower costs. “We have a large talent pool of trained personnel. Of course, technology is more advanced here in India, but the same thing can be done for much less in Sri Lanka…We can have a symbiotic relationship,” he said.

He suggested that Indian IT and ITES firms invest in Sri Lanka to outsource their projects there, especially in view of the recent strengthening of the Indian rupee against the dollar. “Indian companies can use the sliding relationship with regard to the values of our two currencies, and save a lot of money by outsourcing to Sri Lanka.”

Other areas for potential collaboration and investment were hospitality, tourism, pharmaceuticals, higher education, food processing and the film industry, he said.

Sri Lankan Deputy High Commissioner in Chennai P.M. Amza said talks had been initiated between Sri Lankan and south Indian companies on service sector collaboration. Governmental encouragement could serve as the needed push.

Welcoming Indo-Sri Lankan collaboration in the service sector, Tamil Nadu IT secretary C. Chandramouli downplayed any immediate role for the State Government. With Tamil Nadu offering many of the same benefits as Sri Lanka, he did not foresee any immediate outsourcing of IT services to the island nation. However, he felt that the CEPA, aimed at making it easier for professionals to move between countries, could draw the trained Sri Lankan workforce to south Indian IT firms.

Industry experts pointed out that the unstable political situation in Sri Lanka would discourage BPO investment there, especially by western clients.

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