Indian businessess work on beating China at its game

Indian businesses work on beating China at its Sri Lanka game and puts pressure on Colombo to sign trade agreement.

COLOMBO // As China's influence in Sri Lanka grows, India is seeking to play bigger role in its southern neighbour and is putting pressure on Colombo to sign a trade agreement, diplomatic sources said. "There is some concern by India that it doesn't have the kind of role that China is playing in Sri Lanka in the military, political and economic context. That appears to be a source of concern for Indian authorities," said an Asian diplomat, who spoke on condition of anonymity.

Last week a group of local entrepreneurs backed by about 800 of their employees took to the capital's streets in protest against a proposed Indo-Sri Lankan trade services agreement, claiming that it would be detrimental to Sri Lanka's economic interests. The proposed agreement would make it easier for Indians who work in certain service sectors, such as professionals, teachers, doctors and lawyers, to work in Sri Lanka. Some local entrepreneurs are concerned that this would take jobs away from Sri Lankans.

The group immediately won assurances from Mahinda Rajapaksa, the Sri Lankan president, whom they met to express their concerns, that the government would not sign any trade pact that is detrimental to Sri Lanka's interests. However, local political analysts view the recent developments differently. "I think the India issue is more of a case of catching up [with China] in terms of trade and development here. In recent years India has been more interested in bringing countries [in Asia] under its economic umbrella than political interests," noted Harim Peiris, a one-time spokesperson for Chandrika Kumaratunga, a former president.

Kusal Perera, a political columnist for the Colombo-based Sunday Leader newspaper, said there is no issue between India and China vis-à-vis a presence in Sri Lanka. "In many ways, India and China are working together in joint projects like in Myanmar, for example, where they are involved in building an airport," he said in an interview. The countries want to "co-habit" in the region and outside and also come together in an kind of economic group, he said.

However, the local Sunday Times newspaper said in a report on May 30 that India had requested Sri Lanka's permission to set up two more missions at the level of deputy high commission in northern Jaffna and southern Hambantota, the hometown of Mr Rajapaksa. This is in addition to a mission in Colombo and an existing consulate in the central hill town of Kandy. Last month, India set up a consulate - mostly to handle visas - in Jaffna, home to most of Sri Lanka's minority Tamil community, which has close cultural and family ties with the south India state of Tamil Nadu, but now suddenly wants the facility upgraded, the report said.

"There was no immediate information as to what India has said to justify the opening of a diplomatic mission in Hambantota. The only reason attributable is its decision to directly confront what many Indian watchers see as India's growing sensitivity to China's increasing economic development programmes in the Hambantota district," the report said. While India has long-established political, cultural and economic ties with Sri Lanka, China increased its presence after Mr Rajapaksa became president in 2005.

This followed growing criticism by the West over human-rights issues in Sri Lanka in regards to strategies being used against ethnic against Tamil rebels in the civil war. Unable to win support from the West, the government expanded its friendship with India, Iran, Libya and the non-western sector, particularly China. The latter has lent huge sums of money for economic development and also provided military arms support during the war.

According to Mr Peiris, China's involvement has been "exponential" in military, economic and political terms. China, while providing development finance, is also involved in some of the biggest projects in the country such as a port, airport, and international convention centre in Hambantota. Mr Peiris said China, which has a permanent seat in the UN Security Council unlike India, has also helped Sri Lanka deflect pressure from allegations of human-rights abuses.

The Asian diplomat said the Indian foreign secretary, Nirupama Rao, visited Colombo twice in the past two to three months to persuade Sri Lanka to sign the Comprehensive Economic Partnership Agreement, an extension of the Indo-Sri Lanka Free Trade Agreement that has boosted trade between the neighbours. Samantha Kumarasinghe, the chairman of Multi Chemi Group, which produces cosmetics, a huge industry in India, said the extended agreement would destroy Sri Lanka's control of trade and services and bring more benefits to Indian businesses and professionals.

"Under this set-up any professional - even an Indian barber - can come with his family to work in Sri Lanka," Mr Kumarasinghe, who organised the protest demonstration on Tuesday in Colombo, said. @Email:[e-mail]