Colombo is soon to embrace an open sky policy with no restrictions on the number of Indian carriers flying to Sri Lanka, Arjuna Mahendran, chairman of the Board of Investment said in India yesterday.

"He hoped that this would lead to Indian private carriers flying to Colombo", said a statement from the Confederation of Indian Industry (CII). CII is based in Bangalore where it has organised the Partnership Summit 2002, being attended currently by Mahendran. He delivered an address on "Sri Lanka: make a profit in paradise".

The BOI chairman also said that Sri Lanka had proposed a long-term economic linkage with India by building of a land route, setting up free ports as well as large-scale transfer of technology in sectors such as agro-based industries and information technology.

Mahendran, detailing his government’s priorities, said that the first was to resolve the ethnic problem while the second was to revive the economy. Elaborating the reform process in the country, he said that petroleum prices would soon be equated to world prices. As a result, foreign oil companies would be allowed to enter the market. Already, the insurance and power sector has been opened up to private investments.

On investment opportunities in Sri Lanka, Mahendran observed that there were no restrictions on foreign ownership except in defence and certain strategic areas. There were no restrictions on repatriation of profits and dividends, no compulsion on conversion of foreign currency, import duties are low and no export restrictions. Detailing the benefits of the Free Trade Agreement (FTA) between India and Sri Lanka, Mahendran said that foreign direct investment in both countries will increase due to increasing attractiveness of integrated markets and greater economies of scale between the two countries.

The potential sectors for investment in Sri Lanka were identified as rubber, paper and paper boards, garments and textiles, ceramics, precious stones and jewellery, electronics, processed foods, and automobiles and spare parts.