PART -1

COUNTRY ANALYSIS

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HISTORY

Brief History of Nation

Early History & Colonialism

The most ancient of the inhabitants were probably the ancestors of the Veddas, an original

people (numbering about 3,000) now living in remote mountain areas. They were conquered

in the 6th cent. B.C. by the Sinhalese, who were originally from North India; the Ramayana,

the ancient Hindu epic, probably reflects this conquest. The Sri Lanka chronicle

“Mahavamsa” relates the arrival of Vijaya, the first Sinhalese king, in 483 B.C. The Sinhalese

settled in the north & developed an elaborate irrigation system. They founded their capital at

‘Anuradhapura’ which, after the introduction of Buddhism from India in the 3d cent. B.C.,

became one of the chief world centers of that religion; a cutting of the pipal tree under which

Buddha attained enlightenment at Bodh Gaya was planted there. The Temple of the Tooth at

Kandy as well as the Dalada Maligawa are sacred Buddhist sites. Buddhism stimulated the

fine arts in Sri Lanka, its classical period lasted from the 4th to the 6th cent.

The proximity of Sri Lanka to South India resulted in many Tamil invasions. The Chola of

South India conquered Anuradhapura in the early 11th cent & made “Pollonarrua” their

capital. The Sinhalese soon regained power, but in the 12th century, a Tamil kingdom arose

in the north, & the Sinhalese were driven to the southwest. Arab traders, drawn by the island's

spices, arrived in the 12th & 13th cent.; their descendants are the Muslim Moors.

The Portuguese conquered the coastal areas in the early 16th cent. & introduced the Roman

Catholic religion. By the mid-17th cent. The Dutch had taken over the Portuguese

possessions & the rich spice trade. In 1795 the Dutch possessions were occupied by the

British, who made the island, then known as Ceylon, a crown colony in 1798. In 1815 the

island was brought under one rule for the first time when the central area, previously under

the rule of Kandy, was conquered. Under the British, tea, coffee, & rubber plantations were

developed, & schools, including a university, were opened. A movement for independence

arose during World War I. The constitution of 1931 granted universal adult suffrage to the

inhabitants; but demands for independence continued, & in 1946 a more liberal constitution

was enacted.

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An Independent Nation

As Ceylon, it became independent in 1948. the first prime minister was don “Stephen

senanayake”, the country became a republic & its name was changed to Sri Lanka in 1972.

The newly independent nation retained the name Ceylon until the 1972 constitution renamed

it Sri Lanka.

Full independence was finally granted to the Ceylon on Feb. 4, 1948, with dominion status in

the Commonwealth of Nations. In 1950 delegates of eight countries of the Commonwealth

met in Colombo & adopted the Colombo Plan for economic aid to SE Asia. The replacement

of English as sole official language by Sinhalese alienated the Tamils & other minorities, &

led to Tamil protests & anti-Tamil attacks. Riots in 1958 between Sinhalese & the Tamil

minority over demands by the Tamils for official recognition of their language & the

establishment of a separate Tamil state under a federal system (which had been negotiated but

then abandoned by the government) resulted in severe loss of life, predominantly among the

Tamil community. In Sept., 1959, Prime Minister S. W. R. D. Bandaranaike was

assassinated, & in 1960 his widow, Sirimavo Bandaranaike, became prime minister. The

Federal party of the Tamils was outlawed in 1961, following new disorders.

Certain Western business facilities were nationalized (1962), & the country became involved

in disputes with the United States & Great Britain over compensation. The radical policies of

Mrs. Bandaranaike aroused opposition, & the elections in 1965 gave a parliamentary plurality

once more to the moderate socialist United National party (UNP) of Dudley Senanayake, who

became prime minister with a multiparty coalition. Under Senanayake, closer relations with

the West were established & compromise arrangements were made for recompensing

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nationalized companies. However, economic problems & severe inflation continued,

aggravated by a burgeoning population (between 1946 & 1970 the population almost

doubled).

In 1970, Mrs. Bandaranaike & her three-party anticapitalist alliance won a landslide victory,

following considerable preelection violence. She launched social welfare programs, including

rice subsidies & free hospitalization, but failed to satisfy the extreme left, which, under the

Marxist People's Liberation Front, attempted to overthrow the government in an armed

rebellion in 1971. With Soviet, British, & Indian aid, the rebellion was quelled after heavy

fighting.

In 1972 the country adopted a new constitution, declared itself a republic while retaining

membership in the Commonwealth of Nations, & changed its name to Sri Lanka. In the early

1970s the government was confronted with a severe economic crisis as the country's food

supplies & foreign exchange reserves dwindle in the face of rising inflation, high

unemployment, a huge trade deficit, & the traditional policy of extensive social-welfare

programs.

Civil War

Repression of the Tamil language fueled demands by the Tamil minority for an independent

state. Election of a new UNP government under J. R. Jayawardene in 1977 & the

implementation of economic reforms geared toward growth did little to restrain an upsurge of

terrorist violence or of bloody anti-Tamil riots (1977, 1981, 1983). In the 1980s the

“Liberation Tigers of Tamil Eelam” initiated a full-scale guerrilla war against the army in the

north & east; at the same time, radical Sinhalese students assassinated government officials

whom they believed were too soft on the Tamils. In response to a request from Jayawardene's

government, India sent (1987) 42,000 troops to NE Sri Lanka. The Indian troops fought an

inconclusive war with the Tigers & were asked to withdraw by Jayawardene's successor,

Ramasinghe Premadasa, who was elected in 1988.

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The Indian troops withdrew in late 1989, & fighting resumed in 1990. In 1993, Premadasa

was assassinated in a suicide bombing; he was succeeded as president by prime minister &

UNP leader Dingiri Banda Wijetunga. A year later, the opposition People's Alliance party

(PA) came to power, & Chandrika Kumaratunga, the daughter of Sirimavo Bandaranaike,

became prime minister & then president. Her government negotiated a cease-fire with the

Tamil Tigers, but it collapsed after three months as violence resumed. In late 1995 the

government, in a large-scale offensive, captured the Tamil stronghold of Jaffna; heavy

casualties were reported there, while terrorist bombs caused civilian deaths in Colombo. The

war continued throughout the 1990s, as government troops attacked rebel bases & terrorists

carried out political assassinations (including those of several moderate Tamil politicians) &

suicide bombings. By end of the century, more than 60,000 people had been killed in the

ethnic conflict.

In Nov., 2003, the president suspended parliament & assumed control of the defense, interior,

& information ministries, accusing the prime minister of yielding too much to the Tamil

rebels in negotiations. She also briefly declared a state of emergency. The power struggle

created a constitutional crisis in Sri Lanka, & paralyzed the government & its inconclusive

negotiations with Tamil forces.

The crisis continued into 2004, & in January Kumaratunga claimed she was entitled to an

additional year in office because of a secret swearing-in ceremony a year after she was

elected to her second term. (Sri Lanka's supreme court ruled against her claim to an

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additional year in 2005.) The following month the president called early elections, which

were held in April. Her PA-led coalition won a plurality of the parliamentary seats, & she

appointed Mahinda Rajapakse prime minister.

Meanwhile, a split developed in the Tamil guerrillas in March, when the smaller eastern force

broke away, but the following month the main northern force reasserted control in the east.

The rebels accused the government of supporting the renegade faction & refused to restart the

peace talks. Sri Lanka's coastal areas, especially in the south & east, were devastated by the

Dec., 2004, Indian Ocean tsunami that was caused by an earthquake off NW Sumatra. More

than 35,000 people died, & more than 800,000 displaced. Only Sumatra itself suffered greater

loss of life.

In the 2005 presidential election, Prime Minister Rajapakse formed an alliance the JVP &

Buddhist nationalists & came out strongly against autonomy for the Tamils, while his main

opponent, the UNP's Wickremasinghe, was supported by Muslim & Tamil parties. Rajapakse

narrowly won the presidency, aided in part by violence & intimidation by the Tamil Tigers

that kept Tamil voters from the polls in the north & east. Rajapakse named as prime minister

Ratnasiri Wickremanayake, a Sinhalese nationalist who had served in the post during 2000–

2001.

By the end of 2005 the cease-fire with the Tamils appeared more breached than honored. A

new round of Norwegian-sponsored peace talks began in Feb., 2006, but even their

continuation was subject to difficult negotiations. In April the breaches of the cease-fire

escalated sharply, & the Tamil Tigers withdrew from the talks. By the fall the country had

returned to civil war in all but name, but attempts to restart negotiations continued. By the

end of 2006 the rebels had declared the truce defunct, & the government had readopted

antiterrorism measures that it had abandoned in 2002. Fighting in E Sri Lanka that began in

July, 2006, led to a government offensive there that continued into subsequent years &

succeeded in reclaiming territory from the rebels. In Jan., 2008, the government officially

ended with the rebel.

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GEOGRAPHICAL SETTING

Climate

Sri Lanka has a tropical climate with monsoons (large-scale wind systems that reverse

direction seasonally). Most temperature variation in the country is determined by elevation

rather than season, with cooler temperatures at higher elevations. The average monthly

temperature in the lowlands ranges from 26° to 31°C (78° to 87°F) year-round. Temperatures

at Nuwara Eliya, situated at an elevation of 1,525 m (5,000 ft) in the central highlands, range

from 13°C (55°F) in December to 20°C (70°F) in May.

The monsoons bring two distinct periods of heavy rainfall to Sri Lanka. From May to

October the southwest monsoon brings moisture-laden air from the Indian Ocean. From

December to March the northeast monsoon brings moisture-laden air from the Bay of Bengal.

These monsoon patterns combine with Sri Lanka’s surface features to create two climatic

zones in the country: a wet zone in the southwest & a dry zone in the north & east. The wet

zone is inundated with rain during both monsoon seasons, with some rainfall between the

monsoons as well. The western slopes of the central highlands are the wettest area of the

country, receiving average precipitation of more than 3,810 mm (150 in) each year.

In contrast, the dry zone usually receives rain only during the northeast monsoon. Periods of

drought are common during the summer months. This zone has average annual precipitation

of less than 1,905 mm (75 in). The driest parts of the zone along the northwestern &

southeastern coasts receive about 1,270 mm (about 50 in) of rain each year.

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Topology

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The Democratic Socialist Republic of Sri Lanka (formerly known as Ceylon) is about half the

size of England & lies close to the southern tip of India & near the equator. From the coast,

the land rises to a central massif more than 1500 m above sea level. The climate is hot &

humid -monsoon from May to September & the north-east monsoon from November to

March: rainfall, particularly in the south-west, is heavy.

Location: Southern Asia, island in the Indian Ocean, south of India.

Geographic coordinates: 7 00 N, 81 00 E

Area: total:65,610 sq km,

land: 64,740 sq km ,

water: 870 sq km

Coastline: 1,340 km

Climate: tropical monsoon; northeast monsoon (December to March); southwest monsoon

(June to October)

Elevation extremes: lowest point: Indian Ocean 0 m

highest point: Pidurutalagala 2,524 m

Land use: arable land: 13.96%

permanent crops: 15.24%

other: 70.8% (2007)

Irrigated land: 7,430 sq km (2007)

Total renewable water resources: 50 cu km (2001)

Natural hazards: occasional cyclones & tornadoes

Natural resources: limestone, graphite, mineral sands, gems, phosphates, clay,

hydropower etc.

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Land & resources

The island of Sri Lanka is roughly pear-shaped. The Jaffna Peninsula forms a stemlike

extension in the north. The total area of Sri Lanka is 65,610 sq km (25,332 sq mi). The

greatest length, from north to south, is 440 km (270 mi). The greatest width, from east to west

across the island’s broad southern portion, is 220 km (140 mi). Sri Lanka’s coastline extends

a length of about 1,340 km (about 833 mi).

The land of Sri Lanka can be divided into three geographic zones that correspond to

elevation: the central highlands, the lowland plains, & the coastal belt. The central highlands

include numerous mountains, plateaus, & valleys. Pidurutalagala, the highest point in Sri

Lanka, rises 2,524 m (8,281 ft) in the central highlands. In contrast, the elevation of the

surrounding plains ranges from 90 m (300 ft) to sea level. The plains are broadest in the

north. The coastal belt rises about 30 m (about 100 ft) above sea level. Lagoons, sand

beaches, sand dunes,&marshes predominate along the coast, although steep rocky cliffs are

found in the northeast & southwest.

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Rivers & lakes

The rivers of Sri Lanka originate in the central highlands. From there they fall down to the

plains & empty into the sea. The rivers are typically unnavigable in their higher reaches,

where they flow swiftly & turbulently through highly eroded passages to the plains below.

Many rivers descend over steep

cliffs, forming spectacular

waterfalls. In their lower courses,

the rivers slowly meander

through flood plains & deltas.

The longest river of Sri Lanka,

the Mahaweli, traverses a course

of about 330 km (about 205 mi).

It flows northeastward across the

central highlands & empties into the Bay of Bengal near the port of Trincomalee, on the

eastern coast. The country’s second longest river is the Aravi Aru, traversing about 220 km

(about 135 mi) on a northwestward course, from the central highlands to the Gulf of Mannār.

Sri Lanka has no natural lakes. Dams on the Mahaweli & other rivers have created large

reservoirs. In addition, a series of small reservoirs called tanks dot the north central plains,

storing water during the dry season. Some of the tanks were constructed as many as 2,000

years ago.

Minerals of commercial value found in Sri lanka are gemstones, graphite, limonite (a mineral

sand), limestone, quartz, mica, industrial clays, & salt. The only commercially extractable

nonferrous metals are titanium, monazite, & zircon, which are found in beach sands in some

costal areas. Sri lanka has been known since ancient times for the variety of its precious &

semiprecious stones. These include high-value gemstone such as sapphire, ruby, cat’s-eye,

topaz & beryl, as well as semiprecious gemstones such as garnet, moonstone, tourmaline,

feldspar.

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Environment - current issues:

Deforestation; soil erosion; wildlife populations threatened by poaching & urbanization;

coastal degradation from mining activities & increased pollution; freshwater resources being

polluted by industrial wastes & sewage runoff; waste disposal; air pollution in Colombo.

Water is also a serious environment issue in Sri lanka. The mining of coral reefs for the lime

industry has also damaged some marine habitats of Sri lanka.

The Government Of Sri Lanka has ratified international agreement pertaining to global

warming, desertification, endangered species, hazardous wastes, law of the sea & wetlands.

IMPLICATIONS: As Sri Lanka is port it is, so, sea transportation can be done from

India, it is only 32, k.m. away from the port of India. So, Location is favorable for the

export to Sri Lanka.

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POLITICAL

TYPE OF POLITICAL SYSTEM

Official name: Democratic Socialist Republic of Sri Lanka

Form of state: Executive presidency based on the French model

Government type: republic

The executive: The president is the head of state, with executive powers. Elected for a period

of six years by universal adult suffrage, the president may dissolve parliament 12 months

after a legislative election.

National legislature: Under the 1978 constitution, the president of the republic, directly

elected for a 6-year term, is chief of state, head of government, & commander in chief of the

armed forces. Responsible to Parliament for the exercise of duties under the constitution &

laws, the president may be removed from office by a two-thirds vote of Parliament with the

concurrence of the Supreme Court. Unicameral legislature; the 225 members are directly

elected for six years by a system of modified proportional representation.

The president appoints & heads a cabinet of ministers responsible to Parliament. The

president's deputy is the prime minister, who leads the ruling party in Parliament. A

parliamentary no-confidence vote requires dissolution of the cabinet & the appointment of a

new one by the president.

Parliament is a unicameral 225-member legislature elected by universal suffrage &

proportional representation to a 6-year term. The president may summon, suspend, or end a

legislative session & dissolve Parliament. Parliament reserves the power to make all laws.

National elections: Presidential & parliamentary elections are held every six years. In the

November 2005 presidential election the UPFA candidate, Mahinda Rajapakse, secured a

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narrow victory, winning 50.3% of the vote. The next parliamentary election is due around

April 2010.

National government: Mr. Rajapakse, of the People’s Alliance (PA), was elected for his first

term as president in 2005. The UPFA—a alliance of the PA & the Marxist Janatha Vimukthi

Peramuna (JVP, People’s Liberation Front)—won 46.4% of the vote in the 2004 legislative

election, gaining 105 seats in the 225-seat parliament, but fell short of a majority. In 2005 the

JVP left the government, reducing it to a minority. The JVP still provides tentative support to

Mr. Rajapakse, & could rejoin the government.

Local government: Under the Indo-Sri Lankan Accord of July 1987 & the 13th amendment

to the constitution, the Government of Sri Lanka agreed to devolve significant authority to

the provinces. Provincial Councils are directly elected for 5-year terms. The leader of the

council majority serves as the province's chief minister; a provincial governor is appointed by

the president. The councils possess limited powers in education, health, rural development,

social services, agriculture, security, & local taxation. Many of these powers are shared or

subject to central government oversight. As a result, the Provincial Councils have never

functioned effectively. Devolution proposals under consideration as a means of finding a

political solution to the ethnic conflict foresee a strengthening of the Provincial Councils,

with greater autonomy from central control. Predating the accord are municipal, urban, &

rural councils with limited powers.

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Legislative branch: Unicameral Parliament (225 seats; members elected by popular vote on

the basis of an open-list, proportional representation system by electoral district to serve six-

year terms).

Main members of the government

Executive branch:

President; also in charge of defense & finance: Mahinda Rajapakse

Mahinda Rajapakse with Dr.manmohan singh

Prime minister: Ratnasiri Wickremanayake

Ambassador to the United States--Jaliya Wickramasuriya

Ambassador to the United Nations--H.M.G.S. Palihakkara

Agriculture: Maithripala Sirisena

Enterprise development & investment promotion: Anura Priyadarshana Yapa

Export development & international trade: G L Pieris

Foreign affairs: Rohith Bogollagama

Irrigation, water management, ports & aviation: Chamal Rajapakse

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Justice & judicial reform: Amarasiri Dodangoda

Petroleum & petroleum resources development: A H M Fowzie

Power & energy: W D J Seneviratne

Public administration & home affairs: Sarath Amunugama

Tourism: Milinda Moragoda

POLITICAL PARTIES IN SRI LANKA

Sri Lanka has a two-party system, which means that there are two dominant political parties,

with difficulty for anybody to achieve electoral success under the banner of any other party.

In the last decades, the“United National Party” & the “Sri Lanka Freedom Party” have been

the largest parties, by far. The general rule, however, has become coalition politics, since

neither SLFP nor UNP are able to gather parliamentary majorities. In the LTTE-controlled

northern areas, the two main parties are non-existent.

There are more than seventy five political parties in sri-lanka

Stability of Government.

Although there are more than 75 parties in sri-lanka there are only two dominant parties in

sri-lanka. So, there is stability in government.

Tax System

All the taxes & mandatory contributions are measured at all levels of government & include

corporate income tax, turnover tax, all labor taxes & contributions paid by the company

(including mandatory contributions paid to private pension or insurance funds), property tax,

property transfer tax, dividend tax, capital gains tax, financial transactions tax, vehicle tax,

sales tax & other small taxes (such as fuel tax, stamp duty & local taxes). A range of standard

deductions & exemptions are also recorded.

Three indicators are constructed:

Number of tax payments, which takes into account the method of payment, the

frequency of payments & the number of agencies involved in our standardized case

study.

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Time, which measures the number of hours per year necessary to prepare & file tax

returns & to pay the corporate income tax, value added tax, sales tax or goods &

service tax & labor taxes & mandatory contributions.

Total tax rate, which measures the amount of taxes & mandatory contributions

payable by the company during the second year of operation. This amount, expressed

as a percentage of commercial profit, is the sum of all the different taxes payable after

accounting for various deductions & exemptions.

Businesses care about what they get for their taxes & contributions, such as the quality of

infrastructure & social services. Efficient tax systems tend to have less complex tax

arrangements, comprising of straightforward compliance procedures & clear laws. Taxpayers

in such economies often get more from their taxes. Simple, moderate taxes & fast, cheap

administration mean less hassle for businesses, & also more revenue collected & better public

services. More burdensome tax regimes create an incentive to evade taxes.

TAXES (%)

PROFIT TAX (%) 6.50

LABOR TAX & CONT. 16.9

OTHER TAXES 20.3

TOTAL TAX RATE (% PROFIT) 63.7

Paying Taxes in Sri Lanka

Paying Taxes data 2007 2008 2009

Rank 159 164

Time (hours) 256 256 256

Total tax rate (% profit) 61.9 63.7 63.7

Payments (number) 62 62 62

Sri Lanka is ranked 164 overall for Paying Taxes.

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Ranking of Sri Lanka in Paying Taxes - Compared to good practice & selected

economies:

The following table shows Paying Taxes data for Sri Lanka compared to good practice & comparator economies:

Good Practice

Economies

Payments (number) Time (hours) Total tax rate

(% profit)

Luxembourg 59

Sweden 2

Vanuatu 8.4

Selected Economies

Sri Lanka 62 256 63.7

Comparative

Economies

Afghanistan 8 275 36.4

Bangladesh 21 302 39.5

India 60 271 71.5

Maldives 1 0 9.1

Nepal 34 408 34.1

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IMPLICATIONS: Although there are more than 75 political parties in Sri Lanka but

the dominant parties are only two, so there is political stability in the country. But the

tax rate levied is 63.75% of profit & India has also benefit of free trade agreement with

Sri Lanka.

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LEGAL

LEGAL SYSTEM

The Sri Lanka judicial system is complex blend of both common-law & civil-law” Sri

Lanka's legal system reflects diverse cultural influences. Criminal law is fundamentally

British. Basic civil law is Roman-Dutch. Laws pertaining to marriage, divorce, & inheritance

are communal.

JUDICIARY

Sri Lanka's judiciary consists of a “Supreme Court, Court of Appeal, High Court, & a

number of subordinate courts”. A highly complex mixture of English common law,

Roman-Dutch, Kandyan,&Jaffna Tamil law; has not accepted compulsory ICJ jurisdiction.

The new superior court complex in Colombo

The “Supreme Court of Sri Lanka” is the highest court of the nation of Sri Lanka.

The Supreme Court of Sri Lanka was created in 1972 after the adoption of a new

Constitution. The Supreme Court is the highest & final superior court of record & is

empowered to exercise its powers, subject to the provisions of the Constitution. The court

rulings take precedence over all lower Courts.

“The Sri Lanka judicial system is complex blend of both common-law & civil-law”. In some

cases such as capital punishment, the decision may be passed on to the President of the

Republic for clemency petitions

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Sri Lanka's legal system reflects diverse cultural influences. Criminal law is fundamentally

British. Basic civil law is Roman-Dutch. Laws pertaining to marriage, divorce, & inheritance

are communal.

“The principles of English law is applied in relation to Bills of exchange, Sale of Goods,

Partnership, Companies, Insolvency, Banking, Maritime matters, Insurance etc”.

INTELLECTUAL PROPERTY RIGHT

The World Intellectual property organization (WIPO), a specialized agency in the United

Nation’s System, is mandated to promote the protection of Intellectual Property rights in all

the member states.

INTELLECTUAL PROPERTY RIGHT INCLUDES

PATENTS

TRADEMARKS

INDUSTRIAL DESIGNS

COPYRIGHT

PATENTS

A patent is valid for 20 years from the date of application. The patent must be renewed

annually from the expiration of the second year from the date of grant paying a fee.

HOW TO PROTECT INVENTIONS (PATENTS) ABROAD

A patent is valid only in the country where it is granted. As Sri Lanka is a member of

the Paris Convention for the protection of industrial property, Sri Lankans can obtain

patents for their inventions in all the member countries of the Paris Convention under

the national law of the particular country. Almost all the countries are members of this

convention.

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Alternatively, Sri Lankan nationals or residents can apply under the Patent

Cooperation Treaty (PCT) administered by World Intellectual Property organization

(WIPO). One can apply for a patent in many countries (Member Countries of PCT)

through a single application made to WIPO. This is a simpler procedure.

TRADEMARKS

The registration is valid for a period of 10 years from the date of application & is renewable

on the payment of the fee for further periods of 10 years.

PROTECTION ABROAD

Marks registered in Sri Lanka are valid only in Sri Lanka. If you do business in other

countries it is advisable for you to register the mark in those countries. You have to

make applications in each country where you seek the protection under the respective

national law. ( Sri Lanka is not a member of the Madrid System under which you may

make one international application for the member countries.) However, you can

claim priority under the Paris Convention for the protection of Industrial Property in

its member countries. (Within 6 months from the date of application in Sri Lanka).

INDUSTRIAL DESIGNS

A registered design is protected for five years & renewable for two more periods of five

years.

Designs registered in Sri Lanka are valid only in Sri Lanka. If you do business in other

countries it is advisable for you to register your design in those countries. You have to make

applications in each country where you seek the protection under the respective national law.

However, you can claim priority under the Paris Convention for the protection of Industrial

Property in its member countries.

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COPYRIGHT

Copyright in Sri Lanka is generally protected during the life of the author & 70 years after his

death.

PROTECTION ABROAD

The woks of Sri Lankan authors are protected in all the member countries of the

Berne Convention for the protection of literary & artistic works under the national law

of the particular country.

IMPLICATIONS: Although Sri Lanka is a member of WIPO & Paris convention

protection of intellectual property rights issue are there they are not protected.

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ECONOMY

Sri Lanka began to shift away from a socialist orientation in 1977. Since then, the

government has been deregulating, privatizing, & opening the economy to international

competition. Twenty years of civil war has no doubt slowed economic growth, diversification

& liberalization, & the leftist “Janatha Vimukthi Peramuna” (JVP) uprisings, especially the

second in the late 1980s, also caused extensive upheavals.

Following the quelling of the JVP, increased privatization, reform, & a stress on export-

oriented growth helped revive the economy's performance, taking GDP growth to 7% in

1993. Economic growth has been uneven in the ensuing years as the economy faced a

multitude of global & domestic economic & political challenges. Overall, average annual

GDP growth was 5.2% over 1991-2000.

In 2001, however, GDP growth was negative 1.4%--the first contraction since independence.

The economy was hit by a series of global & domestic economic problems & affected by

terrorist attacks in Sri Lanka & the United States. The crises exposed the fundamental policy

failures & structural imbalances in the economy & the need for bold reforms. The year ended

in parliamentary elections in December, which saw the election of a more pro-capitalism

party to Parliament (while the socialist leaning Sri Lanka Freedom Party retained the

Presidency).

The government of Prime Minister ‘Ranil Wickremasinghe’ of the United National Party has

indicated a strong commitment to economic & social sector reforms, deregulation, & private

sector development. In 2002, Sri Lanka commenced a gradual recovery. Early signs of a

peace dividend were visible throughout the economy. Sri Lanka has been able to reduce

defense expenditures & begin to focus on getting its large, public sector debt under control.

In addition, the economy has benefited from lower interest rates, a recovery in domestic

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demand, increased tourist arrivals, a revival of the stock exchange, & increased foreign direct

investment (FDI).

In 2002, economic growth bounced up to 4%, helped by strong service sector growth.

Agriculture staged a partial recovery. At present Agriculture in Sri Lanka needs keen

attention as it directed towards disastorus situation. Industrial sector growth, however,

faltered for the second consecutive year due to weak demand & lower prices for Sri Lanka's

exports. The government was able to exert fiscal control, & inflation trended down. Total

FDI inflows during 2002 were about $246 million & are expected to exceed $300 million in

2003. The largest share of FDI has been in the services sector.

Good progress was made under the Stand By Arrangement, which was resumed by the

International Monetary Fund (IMF). These measures, together with peaceful conditions in the

country, have helped restore investor confidence & created conditions for the government to

embark on extensive economic & fiscal reforms & seek donor support for a poverty reduction

& growth strategy. However, the resumption of the civil-war in 2005 led to steep increase

defense expenditures. The increased violence & lawlessness also prompted some donor

countries to cut back on aid to the country.

Sri Lanka has also accumulated a 9.2 % deficit & the central bank has not intervened since

late 2006 to print more currency. A sharp rise in world petroleum prices combined with

fallout from the civil war has led to inflation hitting 20%.

Global economic relations

Exports to the United States, Sri Lanka's most important market, were valued at $1.8 billion

in 2002, or 38% of total exports. For many years, the United States has been Sri Lanka's

biggest market for garments, taking more than 63% of the country's total garment exports.

India is Sri Lanka's largest supplier, with exports of $835 million in 2002. Japan, traditionally

Sri Lanka's largest supplier, was its fourth-largest in 2002 with exports of $355 million. Other

leading suppliers include Hong Kong, Singapore, Taiwan, & South Korea. The United States

is the 10th-largest supplier to Sri Lanka; U.S. exports amounted to $218 million in 2002,

according to Central Bank trade data--U.S. Customs data places U.S. exports to Sri Lanka at

$166 million in 2002. Wheat accounted for 14% of U.S. exports to Sri Lanka in 2002, down

from the previous year.

25

Currency

Sri Lankan rupee

Sri Lanka had switched to a floating currency after a worsening currency crisis due to

sterilized intervention in January 2001. Foreign reserves had been exhausted defending the

rupee from free fall during the 1990s. By 2004, sterilized intervention was resumed to

prevent further depreciation of the rupee & was eased off in 2005 after a rush of foreign aid

due to the tsunami. By 2006, sterilized intervention was restarted as the rupee lost further

ground. The IMF categorizes the Sri Lankan rupee as a managed float. By 2006, the rupee

depreciated by 5 % & depreciated a further 4.2 % within the first half of 2007. This has been

due to flight of capital out of the country because of rising uncertainty & resumption of the

longstanding civil war. The rupee has been under pressure due to widening trade & budget

deficit, increased cost of living, cost of fuel imports & rising inflation. The rising uncertainty

has given rise to a thriving black market for trading between dollars & rupees. Official

trading through the central bank has been problematic for many traders, coming under

increasing moral persuasion to avoid selling rupees for the sake of national interests .

Over all

Sri Lanka saw GDP growth average 4.5% in the last 10 years with the exception of a

recession in 2001. In late December 2004, a major tsunami took about 40,000 lives, left more

than 6,300 missing & 443,000 displaced, & destroyed an estimated $1.5 billion worth of

property. Government spending & reconstruction drove growth to more than 7% in 2006 but

reduced agriculture output probably slowed growth to about 6 percent in 2007. Government

spending & loose monetary policy drove inflation to nearly 16% in 2007.

26

Sri Lanka's most dynamic sectors now are food processing, textiles & apparel, food &

beverages, port construction, telecommunications, & insurance & banking. The main

economic sectors of the country are tourism, tea export, apparel, textile, rice production &

other agricultural products.

In 2006, plantation crops made up only about 15% of exports (compared with more than 90%

in 1970), while textiles & garments accounted for more than 60%. In addition to these

economic sectors overseas employment contributes highly in foreign exchange, most of them

from middle-east. About 800,000 Sri Lankans work abroad, 90% of them in the Middle East.

They send home more than $1 billion a year. The struggle by the Tamil Tigers of the north &

east for an independent homeland continues to cast a shadow over the economy.

For the next round of reforms, the central bank of Sri Lanka recommends that Colombo

expand market mechanisms in no plantation agriculture, dismantle the government's

monopoly on wheat imports, & promote more competition in the financial sector. A

continuing cloud over the economy is the fighting between the Government of Sri Lanka &

the LTTE, which has cost 65,000 lives in the past 15 years.

Tourism

On the globe or the map of the world, Sri Lanka might look like a tiny green fleck on the

surface of the huge sphere of water, but this tiny green fleck is one of the finest tourism spots

in the world. It is indeed considered a pearl found in water in the shape of a pear by people

who have visited the country & its natives. Sightseeing in Sri Lanka can genuinely become a

dream come true for people who wants to enjoy a perfect holiday amidst nature.

There is no end to places in Sri Lanka where one can visit to attain aesthetic pleasure. One

will find old forts, museums, temples, churches, wildlife sanctuaries, golden beaches,

cascading waterfalls, & also underwater gardens, mountains covered with tea plantations,

ethnic ancient cities & many more to add to the list.

27

Sri Lanka’s tropical climate, scenic beaches, & historical sites are prime tourist attractions.

By the 1970s, sizeable investments were devoted to the building of infrastructure for the

tourism industry, including hotels & resorts. Tourism declined after 1983 as a result of the

civil war & related security concerns. About 560,000 tourists, mostly from Europe & India,

visited Sri Lanka in 2008 approx.

ECONOMY OF SRI LANKA

Currency Sri Lankan rupee (LKR)

Fiscal year Calendar Year

Trade organizations SAFTA, WTO

SRI LANKA (statistics)

GDP ranking 76th (2008)

GDP (purchasing power parity) $82.02 billion (2007 est.)

GDP (official exchange rate) $30.01 billion (2007 est.)

GDP - real growth rate: 6.8% (2007 est.)

GDP - per capita (PPP): $4,000 (2007 est.)

Inflation 20% (2007 est.)

GDP - composition by sector: Agriculture: 11.70%

Industry: 29.9%

Services: 58.4% (2007 est.)

Labor force 7.489 million (2007 est.)

Labor force - by occupation: Agriculture: 34.3%

Industry: 25.3%

28

Services: 40.4%

Unemployment rate: 6%

Household income or consumption

by percentage share:

Lowest 10%: 1.1%

Highest 10%: 39.7%

Distribution of family income: 50

Budget: Revenues: $5.384 billion

Expenditures: $7.608 billion

Public debt: 85.8% of GDP

Inflation rate (consumer prices): 15.8%

Central bank discount rate: 15%

Commercial bank prime lending

rate:

17.08%

Agriculture - products: Rice, Sugarcane, Grains, Pulses, Oilseed, Spices, Tea,

Rubber, Coconuts; Milk, Eggs, Hides, Beef; Fish etc.

Industries: Processing of rubber, Tea, Coconuts, Tobacco &

Other Agricultural Commodities;

Telecommunications, Insurance, Banking; Clothing,

Textiles; Cement, Petroleum Refining etc.

Industrial production growth rate: 7.6% (2007 est.)

Electricity - production: 8.317 billion KWh (2006 est.)

Electricity - consumption: 6.884 billion KWh (2006 est.)

Current account balance: $1.019 billion (2007 est.)

Exports: $8.135 billion f.o.b. (2007 est.)

Exports - commodities: Textiles & Apparel, Tea & Spices; Diamonds,

Emeralds, Rubies; Coconut Products, Rubber

Manufactures, Fish etc.

Exports - partners: US 25.5%, UK 13.2%, India 6.7%, Germany 5.7%,

Italy 5.1% (2007).

Imports: $10.36 billion f.o.b. (2007 est.)

Imports - commodities: textile fabrics, mineral products, petroleum,

foodstuffs, machinery & transportation equipment

etc.

Imports - partners: India 23.1%, Singapore 9.9%, China 8.2%, Iran 7.5%,

29

Hong Kong 6.4% (2007)

Reserves of foreign exchange &

gold:

$3.644 billion (31 December 2007 est.)

Debt - external: $12.2 billion (31 December 2007 est.)

Market value of publicly traded

shares:

$7.769 billion (2006)

Exchange rates: Sri Lankan rupees (LKR) per US dollar - 110.78

(2007), 103.99 (2006), 100.498 (2005), 101.194

(2004), 96.521 (2003).

PUBLIC FINANCE

Public debt 89.6% of GDP

External debt $12.23 billion, (44.6% of GDP)

Revenues $5.61 billion

Expenses $8.39 billion

Economic aid $808 million (recipient)

Communication System

General Assessment: Telephone services have improved significantly & are available in

most parts of the country.

Domestic: National trunk network consists mostly of digital microwave radio relay; fiber-

optic links now in use in Colombo area & fixed wireless local loops have been installed;

competition is strong in mobile cellular systems & mobile cellular subscriber ship is

increasing; combined fixed-line & mobile-cellular teledensity is about 50 per 100 persons

International: Country code - 94; the SEA-ME-WE-3&SEA-ME-WE-4 submarine cables

provide connectivity to Asia, Australia, Middle East, Europe, US; satellite earth stations - 2

Intelsat (Indian Ocean).

Telephones - main lines in use 2.742 million (2007)

Telephones - mobile cellular 7.983 million (2007)

Radio broadcast stations AM 15, FM 52, shortwave 4 (2007)

Television broadcast stations: 14 (2008)

Internet country code: .lk

30

Internet hosts: 4,940 (2008)

Internet users: 771,700 (2007)

Transportation System

Airports: 18 (2007)

Airports - with paved runways: total: 14

Airports - with unpaved runways: total: 4

Railways: total: 1,449 km,

broad gauge: 1,449 km 1.676-m gauge (2007)

Roadways: total: 97,286 km,

paved: 78,802 km,unpaved:

18,484 km (2007)

Waterways: 160 km (primarily on rivers in southwest) (2006)

Ports & terminals: Colombo

IMPLICATIONS: All the economy factor has been considered over the 5 year period.

GDP (PPP)has continuously over the period, GDP (real growth ) over the period has

been increased at 6% CAGR, , GDP (real growth ) over the period has been increased

at 6% CAGR. , inflation over the period has been increased at 2.6% CAGR. , public

debt over the period has been decreased by 2% CAGR. , industrial production Growth

Rate over the period has been increased at 47% CAGR above all factor increase or

decrease are attractive for the economy

31

SOCIO-CULTURAL

Population:

The population of sri lanka is about 21.00 million. The population density is much greater in

the southwestern & northern areas, where the majority of the population live. Density is

highest in the southwest where Colombo, the country's main port & industrial center, is

located.Sri Lanka is ethnically, linguistically, & religiously diverse. About 79 % people live

in rural compare to 21% in urban.

Population 21,128,773 (2008)

Population growth rate 0.94 percent (2008 )

Projected population in 2025 23,707,228 (2025 )

Projected population in 2050 24,920,558 (2050 )

Population density 845 persons per sq mi (2008 )

326 persons per sq km (2008 )

Share urban 21%(2005 )

Share rural 79%(2005 )

Birth rate: 16.63 births/1,000 population (2008)

Death rate: 6.07 deaths/1,000 population (2008 )

Total fertility rate: 2.02 children born/woman (2008 )

Age structure: 0-14 years: 24.1% (male 2,596,463/female 2,495,136)

15-64 years: 68% (male 7,019,446/female 7,340,809)

Over 65 years: 7.9% (male 783,823/female 893,096)

(2008)

Median age: Total: 30.4 years

Male: 29.5 years

Female: 31.4 years (2008 )

Sex ratio: At birth: 1.04 male(s)/female

Under 15 years: 1.04 male(s)/female

15-64 years: 0.96 male(s)/female

65 years & over: 0.88 male(s)/female

Total population: 0.97 male(s)/female (2008)

Infant mortality rate: Total: 19.01 deaths/1,000 live births

Male: 20.76 deaths/1,000 live births

32

Female: 17.17 deaths/1,000 live births (2008)

Ethnic groups:

Sinhalese make up 74% of the population & are concentrated in the densely populated

southwest. Sri Lankan Tamils & Indian Tamils are around 9%, citizens whose South Indian

ancestors have lived on the island for centuries. The British brought them to Sri Lanka in the

19th century as tea & rubber plantation workers, & they remain concentrated in the "tea

country" of south-central Sri Lanka.

In accordance with a 1964 agreement with India, Sri Lanka granted citizenship to 230,000

"stateless" Indian Tamils in 1988. Under the pact, India granted citizenship to the remainder,

some 200,000 of whom now live in India. Another 75,000 Indian Tamils, who themselves or

whose parents once applied for Indian citizenship, chose to remain in Sri Lanka & have since

been granted Sri Lankan citizenship.

Other minorities include Muslims (both Moors & Malays), at about 7% of the population;

Burghers, who are descendants of European colonists, principally from the Netherlands & the

United Kingdom (U.K.); & aboriginal Vedas. Most Sinhalese are Buddhist; most Tamils are

Hindu. The majority of Sri Lanka's Muslims practice Sunni Islam. Sizable minorities of both

Sinhalese & Tamils are Christians, most of whom are Roman Catholic. The 1978

constitution, while assuring freedom of religion, grants primacy to Buddhism.

Ethnic groups

Sinhalese 73.8%,

Sri Lankan Moors 7.2%

Indian Tamil 4.6%

Sri Lankan Tamil 3.9%

Other 0.5%

Unspecified 10%

33

Language

Sinhala, an Indo-European language, is the native tongue of the Sinhalese. Tamils & most

Muslims speak Tamil, part of the South Indian Dravidian linguistic group. Use of English has

declined since independence, but it continues to be spoken by many in the middle & upper

middle classes, particularly in Colombo. The government is seeking to reverse the decline in

the use of English, mainly for economic but also for political reasons. Both Sinhala & Tamil

are official languages.

Languages

Sinhala (official & national language) 74%,

Tamil (national language) 18%,

Other 8%,

English (English is commonly used in government

& 10% population are able to speak )

Religious affiliations

Buddhist 69.1%

Muslim 7.6%

Hindu 7.1%

Christian 6.2%

Unspecified 10%

Education & Skills

Literacy definition: Age 15 & over can read & write.

Total population: 90.7%

Male: 92.2%

Female: 89.2% (2001 census)

Schooling is compulsory for children from 5 to 13 years of age. Education is state funded &

offered free of charge at all levels, including the university level. The government also

provides free textbooks to schoolchildren. Literacy rates & educational attainment levels rose

34

steadily after Sri Lanka became an independent nation in 1948. The government gave high

priority to improving the national education system & access to education. The adult literacy

rate now stands at 90.7 percent. The language of instruction is either Sinhala or Tamil.

English is taught as a second language. Sri lanka have the highest literacy rate in South Asia

(91%) & approximately 50% of the students who have completed their higher education are

trained in technical & business disciplines.

Culture of Sri Lanka

Sri Lanka is situated in the Indian Ocean & is one of the most resplendent islands in the

world. Its beauty is not the same everywhere, the coastal beauty of Sri Lanka is definitely

different from the beauty of Central Highlands, or again you will find a totally new world

when you visit the tea plantations of the country. Needless to say for such an ancient country

(in terms of its existence), culture of Sri Lanka is also diverse. Religion plays an important

role in the molding of the social norms & conventions & thus the all the major religions in the

country have certain customs & conventions of their own. Everything that is so uniquely

Sri Lankan plays an significant role in defining the culture of Sri Lanka. Buddhist & Hindu

temples display the architectural splendor of this island. Specially the architecture has heavy

influence of the Southern temples in India. South Indian temples in general have very

intricate & ornate carvings on various themes, they can range from the carvings from epics or

something on the society itself. The majority of the temples were built at the behest of a

particular king from a dynasty, from the temple architecture much can be known about the

particular age/dynasty.

35

Music & Dances in Sri Lanka

Sri Lanka has its own vibrant culture & customs. Music & dances of Sri Lanka form a very

important part of this culture. Religion in Sri Lanka has influenced the majority of the art

forms be it performing or otherwise & so with Buddhism being the major religion of the

country, it is to be expected that music & dances of Sri Lanka will reflect this heritage to a

major extent.

Music in the country has a heavy influence on

Buddhism, it is said that this religion arrived in

the island with Lord Buddha’s visit in 300 BC.

Following the visit the local populace began

converting to Theravada sect of Buddhism &

this faith is rooted in the Sri Lankan music.

Some of the instruments that are used in music

in Sri Lanka are Gata Bera, Thammatama, Yak

Bera, Udakkiya, Hand Rabana, Daula, Bench Rabbana, a very new drum called Gaula has

been added to this list. This new drum was created by one of the noted Sri Lankan musicians

Kalasoori Piyasara Shiladhipati. Gaula is barrel shaped & contains one head from Gata Bera

& one from Daula. Broadly music of Sri Lanka can be categorized in to the following:

Traditional folk music of Sri Lanka

Local drama music

Hindustani classical music

South Indian classical music

Tamil & Hindustani film music

Western Classical music

Sinhala Light Music

Music & dances in Sri Lanka has equal importance in their society. Dance in Sri Lanka came

in 4th century BC to banish natural disasters & sicknesses. Polonnaruwa period which was in

15th century AD had immense Chola influence & Sri Lankan folk dances started evolving.

More classical dance forms were associated with various rituals & ceremonies, some

centuries old & are based on the indigenous belief of the people before Buddhism came to

36

accepted as the religion of the island. Dance forms in Sri Lanka vary according to the

regional & local traditions. Everything is different like dresses, drums, songs, way of dancing

& movements of hands, legs & fingers.

Classical Dances of Sri Lanka

The origin of Sri Lankan dances goes back to immemorial times

of aboriginal tribes & "yakkas" (devils). According to a Sinhalese

legend, Kandyan dances originate, 2500 years ago, from a magic

ritual that broke the spell on a bewitched king.

Ves Dance

Naiyandi Dance

Uddekki Dance

Uddekki Dance

Pantheru Dance

Vannams

Food Habits

Rice is the staple food of the people for

both lunch & dinner & therefore you can

expect different types of rice platters. It

can be cooked with meat & vegetables or

plain steamed & then taken with various

curries. Curries can be made from

assorted vegetables, fish, seafood, meat

or poultry. A typical curry is either made

with vegetables or chicken or mutton.

Beef is also very popular in Sri Lanka. Rice & one of the “main curries” consist the bulk of

the meal, but you will have a number of side dishes like sambols, chutneys or simply pickles.

Pickles & sambols are at times too hot, you can ask the steward at the restaurant, you are

dining to temper it according to your taste. The most popular sambol of Sri Lanka is very hot,

very tempting provided you enjoy a fiery after taste in your mouth! It is known as the coconut

37

sambol & apart from ground coconut onions, chillies, dried fish from Maldives & lime juice

are used in its preparation. It is served with rice & adds that extra tinge to even the most

bland of Sri Lankan dishes.

Though, it is pertinent to mention that Sri Lankan food is anything but bland! Any discourse

on the cuisine of Sri Lanka will never be complete without mentioning the alcoholic drink

which is popular with both the masses & the classes, toddy. It is prepared from palm tree sap,

do sample some on your holiday to Sri Lanka.

Major festivals & Events

One of the most fascinating island countries of the world, Sri Lanka has a full year long

calendar of religious & social events. Sri Lanka Festival & Events are held in different

seasons but the most noticeable feature of these festivals is that nearly all major festivals take

place or are celebrated on full moon days. Full Moon days are especially significant for this

Buddhist country, each full moon or poya day is a Buddhist holiday. Most shops keep their

shutters down & the public places of entertainment too mainly remain closed. Red meat or

alcohol is not sold in most places & in hotels too alcohol is hard to get.

Sri Lanka has an enormous range of

Buddhist, Hindu, Christian & Muslim

festivals. The “Kandy Esala Perahera”

(July/August) is the country's most

important & spectacular pageant, with 10

days of torch-bearers, whip-crackers,

dancers, drummers & elephants lit up like

giant birthday cakes. It climaxes in great

procession honouring the Sacred Tooth

Relic of Kandy. Second in importance is the

Duruthu Perahera (January), held in

Colombo, which celebrates a visit by Buddha to Sri Lanka.

Other celebrations include National Day (February), which is celebrated with parades, dances

& national games; New Year (March/April), celebrated with elephant races, coconut games

38

& pillow fights; Vesak (May), a sacred full moon festival commemorating the birth, death &

enlightenment of Buddha; the Hindu Vel festival (July/August) in Colombo, where the

ceremonial chariot of Skanda, the God of War, is hauled between two temples; & the

predominantly Hindu Kataragama festival (July/August) in Kataragama, where devotees put

themselves through the whole gamut of ritual masochism.

39

PART -2

MARKETING AUDIT

&

MARKETING PLAN

40

REASONS FOR SELECTING SRI LANKA

Reasons for selecting Sri Lanka for the export of rice from India is as below:

Production of rice in Sri Lanka is less compare to the consumption of rice

consumption of rice is more compare to the other cereals

since 2004 Sri Lanka government reduce the import duties on the rice due to the

production of the rice

India is a major exporter of rice

Geographically Sri Lanka is situated only 35 km. away from Indian sea coastal

line.

It is easier & cheaply to export rice to Sri Lanka & to maintain the final price low.

(i.e. competitive advantage to India compare to the other country)

There is a contract of “FREE TRADE ZONE” between India & Sri Lanka

There is improving political & business relation between the countries.

Both countries are promoting cross border trade

India is major exporter of Sri Lanka, Sri Lanka is importing almost 23.1% of total

import from India

Sea route transportation is available between two large ports (i.e. Chennai port in

India & Colombo port in Sri Lanka)

Other ports facility are also available by which Sri Lanka is only 35 km away

from India

41

STARTING A BUSINESS IN SRI LANKA

When entrepreneurs draw up a business plan and try to get under way, the first hurdles they

face are the procedures required to incorporate and register the new firm before they can

legally operate. Economies differ greatly in how they regulate the entry of new businesses. In

some the process is straightforward and affordable. In others the procedures are so

burdensome that entrepreneurs may have to bribe officials to speed the process or may decide

to run their business informally.

Cumbersome entry procedures are associated with more corruption, particularly in

developing economies. Each procedure is a point of contact, a potential opportunity to extract

a bribe. Analysis shows that burdensome entry regulations do not increase the quality of

products, make work safer or reduce pollution. Instead, they constrain private investment;

push more people into the informal economy; increase consumer prices and fuel corruption.

Starting a Business in Sri Lanka

Starting a Business data 2007 2008 2009

Rank 29 29

Procedures (number) 8 5 4

Duration (days) 50 39 38

Cost (% GNI per capita) 9.2 8.5 7.1

Paid in Min. Capital (% of GNI per capita) 0.0 0.0 0.0

Steps to Starting a Business in Sri Lanka

It requires 4 procedures, takes 38 days, and costs 7.10 % GNI per capita to start a business in

Sri Lanka.

List of Procedures:

1. Apply for approval name

2. Register at the Companies Registry

3. Register with tax authorities to obtain a TIN

4. Register with Department of Labor to obtain EPF and ETF registration

42

Benchmarking Starting a Business Regulations:

Sri Lanka is ranked 29 overall for Starting a Business.

Ranking of Sri Lanka in Starting a Business - Compared to good practice and selected

economies:

43

The following table shows starting a Business data for Sri Lanka compared to good

practice and comparator economies:

Good Practice

Economies

Procedures

(number)

Duration

(days)

Cost (% GNI

per capita)

Paid in Min.

Capital (% of

GNI per capita)

Denmark 0.0

New Zealand 1 1 0.0

Selected Economy

Sri Lanka 4 38 7.1 0.0

Comparator

Economies

Afghanistan 4 9 59.5 0.0

Bangladesh 7 73 25.7 0.0

India 13 30 70.1 0.0

Maldives 5 9 11.5 4.8

Nepal 7 31 60.2 0.0

44

CLOSING A BUSINESS IN SRI LANKA

The economic crises of the 1990s in emerging markets—from East Asia to Latin America,

from Russia to Mexico—raised concerns about the design of bankruptcy systems and the

ability of such systems to help reorganize viable companies and close down unviable ones. In

countries where bankruptcy is inefficient, unviable businesses linger for years, keeping assets

and human capital from being reallocated to more productive uses.

The Doing Business indicators identify weaknesses in the bankruptcy law as well as the main

procedural and administrative bottlenecks in the bankruptcy process. In many developing

countries bankruptcy is so inefficient that the parties hardly ever use it. In countries such as

these, reform would best focus on improving contract enforcement outside bankruptcy.

Three measures are constructed from the survey responses: the time to go through the

insolvency process, the cost to go through the process and the recovery rate—how much of

the insolvency estate is recovered by stakeholders, taking into account the time, cost,

depreciation of assets and the outcome of the insolvency proceeding.

Bottlenecks in bankruptcy cut into the amount claimants can recover. In countries where

bankruptcy laws are inefficient, this is a strong deterrent to investment. Access to credit

shrinks, and nonperforming loans and financial risk grow because creditors cannot recover

overdue loans. Conversely, efficient bankruptcy laws can encourage entrepreneurs. The

freedom to fail, and to do so through an efficient process, puts people and capital to their

most effective use. The result is more productive businesses and more jobs.

Closing Business in Sri Lanka

Closing a Business data 2007 2008 2009

Rank 42 43

Time (years) 1.7 1.7 1.7

Cost (% of estate) 5 5 5

Recovery rate (cents on the dollar) 50.6 44.6 43.4

Benchmarking Closing Business Regulations:

Sri Lanka is ranked 43 overall for closing a Business.

45

Ranking of Sri Lanka in Closing Business - Compared to good practice and selected

economies:

The following table shows Closing Business data for Sri Lanka compared to good

practice and comparator economies:

Good Practice

Economies

Recovery rate

(cents on the $)

Time (years) Cost (% GNI per capita)

Ireland 0.4

Japan 92.5

Singapore 1

Selected Economy

Sri Lanka 43.4 1.7 5

Comparator Economies

Afghanistan 0 no practice no practice

Bangladesh 23.2 4.0 8

India 10.4 10.0 9

Maldives 18.2 6.7 4

Nepal 24.5 5.0 9

46

IMPORT POLICIES

Sri Lanka has one of the most liberal trade regimes in South Asia. Sri Lanka’s main trade

policy instrument is the import tariff. A few years ago Sri Lanka set out to have a simplified

transparent two band tariff system. The country has deviated from this policy recently and the

tariff structure is now subject to an increasing number of changes. Currently, there are 6 tariff

bands of 2.5percent, 5 percent,10 percent, 15 percent, 20 percent and 25 percent. Textiles,

crude oil and wheat are free of duty. There are also a number of deviations from the 6-band

tariff policy. Tobacco and cigarettes carry 75 percent and 100 percent duties, respectively. In

addition, there are specific duties on 46 items, including about 12 agricultural products. These

specific duties are aimed at protecting domestic producers. However, they remain below Sri

Lanka’s bound agricultural tariff rate of 50 percent in the WTO. There is no clear tariff policy

on agriculture. Furthermore, 31 items carry an ad-valorem or a specific duty (whichever is

higher).

There is intermittent use of exemptions and waivers. "Regaining Sri Lanka", the

Government’s policy framework, proposes a strongly pro-trade package that includes moving

towards a stable low uniform rate and reducing non-tariff barriers. The Government has

established a Tariff Advisory Council to examine these issues. The finance minister recently

announced that they would reduce the 6 tariff bands to 5.

There are other charges on imports:

A 10 percent import duty surcharge;

A 1 percent ports and airports development levy (PAL) on imports;

A Value Added Tax (VAT) of 15 percent;

An excise fee on some products such as aerated water, liquor, wines, beer, motor

vehicles and cigarettes;

An Export Development Board fee on all imports where the customs duty is more

than 45 percent; and

Port handling charges.

VAT and excise duties are levied on imports and domestic producers.

47

SRI LANKA TRADE BARRIERS

IMPORT LICENSING

A total of 353 items at the 6-digit level of the Harmonized Tariff Schedule (HST) code

remain under license control, mostly for health and national security reasons. There is a 0.1

percent fee on import licenses.

CUSTOMS BARRIERS

The Government of Sri Lanka implemented the WTO Customs Valuation Agreement in

January 2003 and follows the transaction value method to determine the c.i.f. value. The

scheme has operated quite successfully. Major companies have not faced problems. Sri Lanka

Customs complains of "fly by night" companies undervaluing goods brought in from Dubai

and China. Customs is also in the process of installing an Electronic Data Interchange (EDI)

system to support an automated cargo clearing facility. When implemented, this system

should improve customs administration and facilitate trade.

AGRICULTURE

Following is a list of agricultural trade barriers.

Poultry and meat: There is an unofficial ban on the import of chicken meat, ostensibly to

protect the local industry. Importers have been discouraged from applying for licenses to

import U.S. chicken. A Singaporean-owned poultry company in Sri Lanka dominates the

domestic market with an approximately 80 percent market share. United States chicken could

compete effectively if allowed into the market. Imports of duck and turkey from the United

States are permitted only from states free of avian influenza. Imports of beef from the United

States are banned due to fears of bovine spongiform encephalopathy.

Wheat: The Government is considering adopting phytosanitary regulations for wheat. Such a

move could affect U.S. wheat exports to Sri Lanka. Urocystis agropyri syn Urocystis tritici’

48

and Neovossia indica syn Telletia indica’ are the organisms that are under review for possible

prohibition.

STANDARDS TESTING, LABELING AND CERTIFICATION

At present there are 84 items that come under the Sri Lanka Standards Institution (SLSI)

mandatory import inspection scheme. Importers have to obtain a clearance certificate from

the SLSI to sell their goods. SLSI accepts letters of conformity from foreign laboratories, but

retains the discretion to take samples and perform tests. The list of items under the SLSI

inspection scheme is to be expanded by another 25 items in 2004.

There is discussion within some sections of health and environment sectors to introduce a

labeling requirement for imports of bioengineered food, but no requirements are in place

currently. A new labeling regulation has come into effect which relates to the information

that should appear on a label of any prepackaged food product offered for sale, transported or

advertised for sale in Sri Lanka, including imported food.

GOVERNMENT PROCUREMENT

Sri Lanka is not a member of the WTO Government Procurement Agreement. Government

procurement of goods and services is mostly done through a public tender process. Some

tenders are open only to registered providers. The Government publicly subscribes to

principles of international competitive bidding, but charges of corruption and unfair awards

continue. All tenders presented for Cabinet approval now need to be routed through a cabinet

subcommittee chaired by the Minister of Finance. There are no professional evaluation

experts in Sri Lanka. Tender board members are routinely pulled from other jobs B applying

limited evaluative capacity and lengthening the tender process.

EXPORT SUBSIDIES

Exporting companies approved by the BOI, are generally entitled to corporate tax holidays

and concessions. Exporters receive institutional support from the Export Development Board

in marketing. Sri Lanka Export Credit Insurance Corporation (SLECIC) issues insurance

policies and guarantees to exporters.

49

Imports for exporting industries and BOI approved projects usually are exempted from VAT.

For some others, the VAT is refunded. There are no major complaints regarding VAT

refunds. The airports and ports levy on imports for export processing is 0.5 percent.

INTELLECTUAL PROPERTY (IPR) PROTECTION

Local agents of U.S. and other international companies representing recording, software,

movie, and consumer product industries continue to complain that lack of IPR protection is

damaging their business. Piracy levels are very high for sound recordings and software,

making it difficult for the legitimate industries to establish themselves in Sri Lanka.

Sri Lanka is a party to major intellectual property agreements, including the Berne

Convention for the protection of literary and artistic works, the Paris Convention for the

protection of industrial property, the Madrid Agreement for the elimination of false or

deceptive indication of source on goods, the Nairobi Treaty, the Patent Co-operation Treaty,

the Universal Copyright Convention and the Convention establishing the World Intellectual

Property Organization (WIPO). Sri Lanka’s intellectual property law is based on the WIPO

model law for developing countries. Sri Lanka and the United States signed a Bilateral

Agreement for the Protection of Intellectual Property Rights in 1991, and Sri Lanka is a party

to the WTO Trade-Related Intellectual Property Rights (TRIPS) Agreement.

In November 2003, a new intellectual property law came into force. This law meets both

U.S.-Sri Lanka Bilateral IPR Agreement and TRIPS obligations to a great extent. The law

will now govern copyrights and related rights, industrial designs, patents for inventions,

trademarks and service marks, trade names, layout designs of integrated circuits,

geographical indications, unfair competition and undisclosed information. All trademarks,

designs, industrial designs and patents must be registered with the Director General of

Intellectual Property.

Infringement of IPR is a punishable offense under the new law, and IPR violations are subject

to both criminal and civil jurisdiction. Relief available to owners under the new law includes

injunctive relief, seizure and destruction of infringing goods and plates or implements used

for the making of infringing copies, and prohibition of imports and exports. Penalties for the

first offense include a prison sentence of 6 months or a fine of up to $5,000.The penalties

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could double for the second offense. Enforcement, however, is a serious problem, as is public

awareness of IPR. The domestic implementing legislation under the old law was very weak

and the Government did not act as an enforcer of IPR laws. Aggrieved parties had to seek

redress of any IPR violation through the courts, a frustrating and time-consuming process.

The Director of Intellectual Property and international experts have begun IPR legal and

enforcement training for customs and police officials. An active US Embassy-led IPR

working group comprising affected industries is also working closely with the Sri Lanka

Government to pursue more aggressive enforcement and enhance public awareness.

It will take time before new procedures and court precedents are established under the new

law. In addition, Sri Lanka needs to ratify and conform to the WIPO Performances and

Phonograms Treaty WPPT) and the WIPO Copyright Treaty (WCT). Sri Lanka is completing

its accession to the WTO Information Technology Agreement.

LEGAL SERVICES

A person can provide legal consultancy services without being licensed to practice law in Sri

Lanka. Foreigners are not allowed to practice law (appear in courts) and do not have statutory

recognition in Sri Lanka. Sri Lankan citizens with foreign qualifications need to sit for exams

conducted by the Sri Lanka law college in order to practice and register in the Supreme

Court.

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TRADING ACROSS BORDERS IN SRI LANKA

Documents recorded include port filing documents, customs declaration and clearance

documents, as well as official documents exchanged between the parties to the transaction.

Time is recorded in calendar days, from the beginning to the end of each procedure. Cost

includes the fees levied on a 20-foot container in U.S. dollars. All the fees associated with

completing the procedures to export or import the goods are included, such as costs for

documents, administrative fees for customs clearance and technical control, terminal handling

charges and inland transport. The cost measure does not include tariffs or duties.

Economies that have efficient customs, good transport networks and fewer document

requirements, making compliance with export and import procedures faster and cheaper, are

more competitive globally. That can lead to more exports; and exports are associated with

faster growth and more jobs. Conversely, a need to file many documents is associated with

more corruption in customs. Faced with long delays and frequent demands for bribes, many

traders may avoid customs altogether. Instead, they smuggle goods across the border. This

defeats the very purpose in having border control of trade to levy taxes and ensure high

quality of goods.

Trading Across Borders data 2007 2008 2009

Rank 60 66

Documents for export (number) 7 8 8

Time for export (days) 25 21 21

Cost to export (US$ per container) 797 810 865

Documents for import (number) 12 6 6

Time for import (days) 26 20 20

Cost to import (US$ per container) 789 844 895

Benchmarking Trading Across Borders Regulations:

Sri Lanka is ranked 66 overall for Trading Across Borders.

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Ranking of Sri Lanka in Trading Across Borders - Compared to good practice and

selected economies:

The following table shows trading Across Borders data for Sri Lanka compared to good

practice and comparator economies:

Good PracticeEconomies

Docun.for Ex.(no)

Time forEx. (days)

Cost toEx (US$/cont.)

Docu.for Im(no)

Time forIm (days)

Cost toIm (US$/Cont.)

Denmark 5France 2 2Malaysia 450Singapore 3 439

Selected EconomySri Lanka 8 21 865 6 20 895

Comparator EconomiesAfghanistan 12 74 3000 11 77 2600Bangladesh 6 28 970 8 32 1375India 8 17 945 9 20 960Maldives 8 21 1348 9 20 1348Nepal 9 41 1764 10 35 1900

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RICE INDUSTRY

The importance of rice in Sri Lanka

Rice is the single most important crop occupying 34% (0.77/million ha) of the total cultivated

area on Sri Lanka. On average 560000 ha are cultivated during Maha Month & 310000 ha

doring yala month making the average annual extent sown with rice to about 870000 ha.

About 1.8 million farm families are engaged in paddy cultivation island-wide. Sri Lanka

currently produces 2.7 million tonne of rough rice annually & satisfies around 95% of the

domestic requirement & 5% of total need satisfied by the imported rice. Rice provides 45%

total calorie & 40% protein requirement of an average Sri Lankan. The per capita

consumption of rice fluctuates around 100 kg per year depending on the price of rice, bread

& wheat flour.

It is projected that the demend for rice will increase at 1.1% per year & to meet this rice

production should grow at the rate of 2.9% per year. Increasing the cropping intensity &

national average yield are the options available to achieve this production targets.

The curreny cost of production of rough rice is rs 1.50 per kg.. Nadu rice could be sold at Rs

30-33 & sambha rice at between Rs 35-38 /kg. The cost of Labour, farm power & tradable

inputs constitutes of 55%, 23% & 23% respectively. The labor cost has risen at a higher rate

than other costs over the last few years.

While the global demand for rice will increase at 1.95% the production will increase at

1.62% / annum. Making a tradable rice volume to be doubled in 20 years time.

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PRODUCT DETAILS

The product we are going to export to Sri Lanka from India is “Rice” & its specification &

details are as under.

Product : - Rice

Brand Name : - Rainbow Rice

Product Type : - Non Basmati Rice

Product Line : -

Non-Basmati White Rice (Short Grain)

Non-Basmati Parboiled Rice (Sella/yellow)

Long Grain Non-Basmati White Rice

Long Grain Non-Basmati Parboiled Rice

(Sella/yellow)

Long Grain Non-Basmati Premium Quality

Sortexed Rice.

Product Packaging : - different packages of 20, 30 & 50 Kg.

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RESEARCH & INFORMATION SYSTEM

Market research is the gathering, recording and analyzing of information about markets and

their probable reaction to product, price, distribution and promotion decisions. Market

research is critical for successful NPD and marketing mix planning.

Gathering information can be done by either desk or field research. Desk research involves

analyzing all the internal and external information available. Field research is done by

contacting consumers either using surveys, questionnaires, feasibility studies or sampling,

among other methods to get primary data from the target market.

There are various ways of carrying out market research:

Do it yourself: For small companies with limited resources

Market research department: Very large organizations may have their own dedicated

market research department.

Market research agencies: These companies specialize in market research. Research may be

done with the collaboration of the company's marketing department, but fieldwork will be

carried out by the agency.

STAGES IN THE MARKET RESEARCH PROCESS

1. Define marketing problems/opportunities

2. Set objectives, budgets and timetables

3. Research design

a. Who will complete research?

b. What questions need to asked/answered?

c. How much time will be dedicated to research?

4. Data collection

5. Data evaluation

6. Report writing & presentation

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Problem definition: This is the realization that a marketing problem needs information to

find its solution.

Research design: This defines what form the research will take and what will be achieved. It

encompasses objectives of the research. The research design also includes a timeframe and

the all-important costings.

Data collection: This involves the actual carrying out of the research. There are two main

categories of market research

Qualitative research: This is exploratory research which aims to determine consumers'

attitudes and values in a way that sampling using questionnaires cannot. For this reason

qualitative research relies on some form of interaction with the consumer. Main forms of this

are focus groups, in-depth interviews and observation.

Quantitative research: Surveys and short interviews are the main forms of quantitative

analysis. Here values and attitudes are measured and questions are generally given in a "yes-

no" or scale from 1-5 format.

Data analysis: The form of analysis will depend on the type of research used e.g. qualitative

analysis will generally involve identification of some major issues and present the nature of

the comments made on them. While there are now computer programmes, which can help

interpret data, this is generally used for interpreting qualitative data, which is more statistical.

Report writing: The final report will summarize the objectives of the research and give

detailed analysis. This is presented in graphic form where possible (bar charts, pie charts etc).

It's important that the information is clearly presented so that managers can draw clear

conclusions from the report. An executive summary at the beginning summarizes all major

findings.

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THE PURPOSE OF MARKET RESEARCH

Market research is the collection and analysis of data in order to identify and satisfy

consumer needs. The main purpose is to reduce risk and facilitate decision-making. It is

particularly useful when launching a new product and ensures that the right goods are

produced. Market research provides information on consumer needs and wants, competitors,

the marketing mix and potential sales.

Individuals have different requirements and consumers with similar characteristics must be

identified. A company can then choose a target market or section of the market for its

products. This provides a focus for marketing activities.

Competitors - no firm exists in isolation. Competitors must be identified and their actions

monitored. Research must be undertaken on competing products in order to identify a

competitive advantage for the new product.

Marketing mix - marketing involves having the right product at the right price in the right

place using the right promotion. These are the 4Ps of the marketing mix. It is necessary for

the right combination of these to be used in order for a product to be successful. For instance

there is no point advertising nationally if research shows the product is only sold in the local

area.

Potential sales - by knowing the likely level of sales a firm will be able to estimate the

correct amount to produce/supply. This reduces the financial risk involved and ensures the

maximum return from the firm’s investment.

METHODS AND TYPES OF MARKET RESEARCH

There are two main methods of market research –

1. Desk research

2. Field research

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Desk research

It also known as secondary research is making use of information that is already available.

Internally the firm can draw on its own records. Different departments can provide

information on sales trends, customers and costing, which are useful in the development of

new products. Extensive published material can also be sourced externally. In addition the

development of new technology such as the Internet provides information at the touch of a

button.

Field research or primary research

It may include surveys, questionnaires and general observation. Surveys involve questioning

people directly about their attitude to a particular product or service. Surveys are usually

carried out using a face-to-face interview or by telephone. Because it is impossible to survey

all target customers, sampling is used. A representative group or sample, whose views will

accurately reflect the target population, is chosen. Questionnaires are lists of prepared

questions which potential customers are asked to fill out. They are often used in conjunction

with surveys. Careful attention must be given to the design of questionnaires so that the

answers received are of value for decision-making. Information can be gathered by observing

people making purchases. A particular store, for example, could be chosen and a study made

of how many people buy a particular product.

There are two types of market research –

1. Quantitative

2. Qualitative.

Quantitative research

It provides numerical data. At the completion of a quantitative project it is possible to say (for

example) what proportion or percentage of the population fall into different groups – those

that want something, those that would be likely to buy something, those that are in favor of a

particular policy or plan, etc. The essence of quantitative research is that every respondent is

asked the same series of questions.

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Quantitative research

It can be carried out in various ways including face-to-face interviewing, by telephone, by

post and self-completion questionnaires. Qualitative research provides an understanding of

how or why things are as they are. It can be used on its own or to help in the development of

a questionnaire for a quantitative study. There are no fixed set of questions and therefore no

assumptions about what is, or is not, important. Instead there is a list of topics, problems, or

possibilities to be explored. The informant’s own concerns or assumptions heavily influence

the form and nature of the discussion.

Qualitative research can be used for everything from testing reaction to a potential new

advertising campaign, to exploring staff attitudes to a new management structure or

procedure. There are various sorts of qualitative research, including unstructured interviews

and focus groups (group discussions).

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LINKING DEVELOPMENT AND MARKET RESEARCH

The technical development of “Rainbow Rice” took place over four years and involved

extensive use of consumer feedback. Market research in the form of consumer testing will

impact on the product's recipe, texture, and packaging. It is important to get all these

elements correct when launching a product.

Recipe and Texture

Market research carried out randomly chosen consumers found that consumers associated a

unique intimacy with Indian Rice. Popularity of the product in market testing was attributed

to several key features. That identified features would later be incorporated into the product's

brand image and advertising.

Selecting a Brand Name

The name for the new product was chosen following extensive market research. This

included consumer focus groups where groups of consumers were brought together to

provide feedback on a range of potential names for the new bar. Research found that the

name 'Rainbow' represented the characteristics that Rice wanted to reflect in the brand's

personality so that it would appeal to the target market.

A product's brand personality is a description of its characteristics in relation to the target

market for the product. It assists marketers to develop suitable advertising and promotional

campaigns for the product.

Packaging

The packaging for Rainbow Rice was also determined by consumer research and influenced

by the Rainbow brand personality. It was designed to fit with the product's image of being

soft and indulgent and had a particular appeal among the target market. Indeed the selected

colour on the packaging of a combination of Green & Blue was used for their attractiveness

Research found that the final packaging showed the new product to be a modern and quality.

The variety of the products offered for the launch phase was the standard packs.

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PROMOTION STRATEGIESPROMOTION STRATEGIES

THE LAUNCH STRATEGY FOR RICE

The first key challenge was to find the correct in-store position for this product. Now that it

was clear how the product was to be positioned in retail stores, the marketing

communications campaign had to inform consumers about this new product.

THE LAUNCH CAMPAIGN

For a new product like RICE, the main objective of the launch campaign was to build

awareness of the new brand. RICE approached this mainly in three ways: advertising,

sampling and PR.

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Advertising:

A TV ad campaign was devised illustrating one of the important consumption occasions

(watching TV in the evening), and it was aired for eight weeks. This advertisement reached

85% of the market and was seen by every adult in the target audience at least seven times.

Sampling:

From experience, knew that in-store sampling was vital for a successful launch of rice as a

product. A major sampling and couponing campaign was devised whereby three-day

sampling events were carried out across 100 major stores in different countries.

Public Relations:

One of the most underestimated areas of the marketing mix, PR is invaluable for awareness

building of an intended usage occasion. PR can reach consumers when they are least

expecting it, and outside the normal forms of contact like instore, TV etc. To support these

main PR activities undertaken were:

A Radio Promotion with FM stations where the prizes consisted of hampers with

"all you need for a night-in": Snaps; DVDs, slippers (!) and gift membership of

screenclick.com.

Media Gift to presenters of drive time radio shows and afternoon TV

Product Placement: Samples were sent to Fair for display in the shop or possibly for

evening scenes in homes. Samples were also given to major interior design trade

shows for placement on tables in living room displays.

Point of Sale (POS): Naturally, given that the product is sold in retail outlets, in-store

marketing support was also developed. This consisted mainly of attractive floor units, shelf

headers and glorifiers to give standout in-store.

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ADVERTISING TO REFLECT BRAND PERSONALITY

The advertising theme for the Rainbow RICE product launch was 'All in a RICE Rainbow'.

The advertising strategy was developed around the brand personality of the product and

sought to appeal lower & middle class segments.

PROMOTIONAL STRATEGY

Advertising by bill board

Advertising by television

Advertising by papers

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DISTRIBUTION STRATEGIESDISTRIBUTION STRATEGIES

DISTRIBUTION STRATEGYDISTRIBUTION STRATEGY

A channel performs the work of moving goods from produces to consumers. It overcomes the

time, place, and possession gaps that separate goods and services from those who need or

want them.

PULL STRATEGY FOR RICEPULL STRATEGY FOR RICE

A pull strategy involves the manufacturers using advertising and promotions to induce

consumers to ask intermediaries for the product, thus inducing the intermediaries to order it.

The strategy is appropriate when there is high brand loyalty and high environment in the

category, when people perceive differences between brands and when people choose the

brand before they go to the store.

FUNCTIONS OF STRATEGYFUNCTIONS OF STRATEGY

They assume risks connected with carrying out channel/work.

They provide for the successive storage and movement of physical products.

They provide for buyer’s payment of their bills through banks and other financial

institution.

They oversee actual transfer of ownership from one organization or person to another.

Gathered in formation about potential and current customers, competitors and other

factors and process in marketing environment.

They develop and disseminate persuasive communication to stimulate purchasing.

They reach agreements on price and other terms so that transfer of ownership of

possession can be affected.

They place order with manufacturers.

They acquire the funds to finance inventories at different level in channel.

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STEPS FOR DISTRIBUTION OF RICESTEPS FOR DISTRIBUTION OF RICE

Analyzing customers needs.

Establishing channel objectives.

Identifying the major channel alternatives.

Evaluating major channel alternatives.

MULTINATIONAL MARKETING SYSTEMSMULTINATIONAL MARKETING SYSTEMS

Single market; through a single channel for RICE.

Multi channel marketing for RICE occurs when the firm uses two or more marketing

channels to reach one or more customer segments.

CHANNEL MANAGEMENT DECISIONCHANNEL MANAGEMENT DECISION

Selecting channel member

Training channel member

Marketing channel member

Evaluating channel member

INTERMEDIARIESINTERMEDIARIES

Retailer

Jobbers

Wholesaler

Industrial distribution

Manufacturer’s representative

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DISTRIBUTIONDISTRIBUTION

Production will be in India & will be exported to Sri Lanka. The company would then

employ a dealer in major city like Colombo or dambula where the retailer or customer can

easily come to the dealer & the deal can be made with the dealer’s support.

DISTRIBUTION CHANNELDISTRIBUTION CHANNEL

INDIAN FARMER

SUPPLIER (INDIA)

PURCHASER (SRI LANKA)

LOCAL DEALER

RETAILER

CUSTOMER

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PRICING STRATEGIESPRICING STRATEGIES

To set the price the concern of all affected parties must be addressed the manufacturer needs

to make a profit so do resellers who demand adequate margin for their services moreover

competitors reaction in terms of their price responses must be anticipated finally it necessary

to take in account both consumer & the value they place the product.

FACTORS AFFECTING SETTING THE PRICE

Several factors must be taken into consideration in setting the price including:

Cost

Elasticity of demand

Supply

Product image

Turnover

Market share or volume

Product life Cycle

Number of product involves.

The optimum mix of these ingredients varies by the product market & corporate

objectives.

FACTOR AFFECTING PRICE SETTING IN INTERNATIONAL CONTEXT

Price setting in the international context is further complicated by such factors as:

Foreign Exchange Rate

Relative Labour Cost

Relative inflation rate in various countries.

Other important consideration are export packing cost & charges transportation cost

tariff tax laws & Profit Remittance restriction

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PRICING STRATEGIESPRICING STRATEGIES

We have to set a price for the first time when we develop a new product.

NINE PRICE QUALITY STRATEGY FOR TEANINE PRICE QUALITY STRATEGY FOR TEA

Premium strategy = high price, high quality

High value strategy = medium price, high quality

Super value strategy = low price, high quality

Overcharging strategy = high price, medium quality

Medium value strategy = medium price, medium quality

Good value strategy = low price, medium quality

Rip off strategy = high price, low quality

False economy strategy = medium price, low quality

Economy strategy = low price, low quality

PROCESS FOR SETTING PRICING STRATEGY/POLICYPROCESS FOR SETTING PRICING STRATEGY/POLICY

Selecting the pricing objective

Determining demand

Estimating costs

Analyzing competitor’s (cost, price and offers)

Selecting pricing method

Selecting final price

ADOPTING THE PRICEADOPTING THE PRICE

Geographical price: Barter, compensation deal, counter trade, cash

Price discount and allowances: Cash discount, quality discount, function discount,

seasonal discount, allowance

Promotional pricing: Loss leader pricing, special event pricing, cash rebates, low I

interest, longer payment, warranties

Discriminatory pricing: Customer segment pricing, image pricing, channel pricing,

time pricing

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PRICING METHODSPRICING METHODS

Here we have chosen the cost based price approach, which calculated on basis of cost.

Also we want to go with the negotiation based approach because according to the negotiation

base approach price is low compare to market price, which will leads to the satisfaction of

customers.

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PROCEDURE TO EXPORT RICE TO SRI LANKA FROM INDIA

First of all you should have IEC NO, from government (India)

When you receive the order, you should notify the customer that can supply the goods as per

the requirements stated on the order & that the LETTER OF CREDIT should be opened in

your favor. That constitutes your acceptance of the contract.

In that notification, you will stipulate how much time is allowed for making the payment after

the document have been received by the customer’s bankers. This is because the documents

will travel quickly by airmail whereas the goods might arrive laterby sea or could be delayed

in the air freight process. However, if you do use air-freight, the customer might be perfectly

happy to authorize the payment to be made as soon as the documents arrive, as they will

include a copy of the BILL OF LADING or AIRWAY BILL which proves that the goods are

on their way.

The opening of the L.C. signifies the customer’s acceptance of the contract.

The ORIGINAL documents, WITH THE BILL OF EXCHANGE, should be sent from your

bank to the customer’s bank as the goods are handed over to the shippers (or their agent).

When sending the goods on F.O.B. basis, it often savis time (and bother for the customer) if

you pay for the INSURANCE of the shipment just before you hand the (i.e. it is usually not

very costly) goods over.

A copy of the documents, WITHOUT THE BILL OF EXCHANGE, should accompany agent

can inform the customer-the shipper or the import the goods, so that bankers as soon as the

goods arrive. The bank will then authorize the release of the goods to the customer or the

agent, provided that the original documents have already arrived at the bank & the BILL has

been accepted.

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DOCUMENTS REQUIRE

Import prohibitions, which apply to a range of goods,

The Food Act NO. 26 of 1980-

Contains the laws & provisions for regulations in food safety;

Ministry of health is the implementing agency: &

The food of advisory committee is the statutory body.

The plant protection Act No. 35 of 1999 –

Contains the regulations for protection of plants, fresh fruits, & vegetables, soil &

others organism.

Director General of department of agriculture is the statutory body.

The designated material in the regulation can not be imported into Sri Lanka without

permits.

Import licenses

The department of imports & exports control has a frormal procedure in issuing licenses

where conditions are imposed on import licenses in respect of certain items due to

environmental & other related reasons.

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CONCLUSION

Rice export constitutes a considerable share in the national exports. India is likely to be major

exporters next to Thailand & its influence on the global rice trade will be significant. Keeping in view

the importance of rice in the national export items, concerted efforts are required to be made to further

promote the export of rice.

There is a good scope for India to take advantage of the new trade opportunities for promoting the

export of rice. This can be achieved if production is made as per the requirements of international

markets by increased investment in research & development coupled with export friendly trade

policies.

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