Vodafone mulls action after 'grossly unjust' tax proposal

Vodafone Group Plc is considering a number of actions following a budget proposal by India to retrospectively tax overseas transactions involving local assets, the company said on Friday, calling the idea "grossly unjust". 

Finance minister Pranab Mukherjee announced a new proposal that would allow authorities to back-date tax claims on overseas deals in his annual budget this month, in a move that business figures have said will hurt foreign investment. 

"We are urgently considering a number of courses of action, both in India and internationally, in consultation with our advisers and we continue to discuss these issues with a wide range of stakeholders both in India and internationally," the company said. 


Vodafone won a five-year legal battle in January when the Supreme Court dismissed a $2.2 billion tax demand from authorities raised over the British company's acquisition of Hutchison Whampoa Ltd's Indian mobile assets in 2007. 

Business groups had hailed the court's decision as bringing clarity to the country's investment climate, but the proposed amendment to 50-year-old-tax laws would allow India to open a new front against the company. 

Vodafone, in its statement, said that the proposed amendments to the law have raised "widespread and profound concerns in the minds of international investors." 

The company, however, said that it was "not in a position to comment" on the possible actions it would take regarding the proposal. 

Vodafone's India unit is the country's second largest mobile telecom provider by revenue, and third-largest by subscribers. 

India's largest overseas corporate investor, the London-listed company's long-running dispute has come to symbolize the perils foreign firms face doing business in the country. 

The tax proposal, if written into law, could also affect Kraft Foods Inc's 2010 acquisition of Cadbury's Indian business and deals involving Indian assets sold by AT&T Inc and SABMillerPlc's purchase of Fosters.

IIT-Delhi country's highest-ranked institution

Indian Institute of Technology- Delhi is the country's highest ranking institution in world with a global rank of 218, the Rajya Sabha was informed today. 

Minister of State for HRD D Purandeswari said during Question Hour that as per theQuacquarelli Symonds global system of ranking of higher education institutions for 2011, IIT-Delhi is the overall highest ranking institution in India at serial number 218. 

"As per the Times Higher Education World University Rankings for 2011, IIT-Bombay is the highest ranked institution at serial 317, while the Academic Ranking of World Universities has ranked Indian Institute of Science, Bangalore at serial 321," she said. 

As per the 2011 QS Engineering & Technology Rankings, IIT-Bombay is at serial 43, IIT-Delhi at 50, IIT-Kanpur at 59 and IIT-Madras at 60 in Computer Science and Information Technology. 

In the same ranking system in Civil and Structural Engineering, IIT-Bombay is ranked at serial 30, IIT-Kanpur at serial 38 and IIT-Delhi at serial 43. 

As per QS Global Business School Report, 2012, Indian Institute of Management-Ahmedabad has been ranked second in the Asia Pacific region, next to INSEAD (Institut Europeen d Administration des Affairs), Singapore while IIM-Bangalore, Indian School of Business, IIM-Calcutta and SP Jain Institute of Management and Research, Mumbai figure in the top 20 institutes. 

According to Financial Times London Global Buiness School rankings, IIM-Ahmedabad is at serial 11 and Indian School of Business at serial 13.

Green tribunal suspends enviromental clearance to Posco

The environment clearance granted to Posco's mega steel project in Orissa in January 2011 will remain suspended till theenvironment ministry reviews it afresh, theNational Green Tribunal held today. 

"The environment clearance granted on January 31, 2011 to the project shall remain suspended till such review and appraisal is done by the ministry," a bench of tribunal comprising Justice C V Ramulu and Devendra Kumar Agarwal held. 

The tribunal pointed out that memorandum of understanding between the Orissa government and Posco states that the project is for production of 12 million tonnes of steel per annum (MTPA) but the environment impact assessment (EIA) report has been prepared only for 4 MTPA steel production in the first phase. 

It said the MoEF should take "policy decision" that in projects of such magnitude the EIA should be done for the complete project. 

"The EIA should assess it for the full capacity right from the beginning," it said. 

The tribunal directed the MoEF to review the clearance afresh and attach "specific conditions" which Posco would have to follow in a "defined timeline". 

It also directed the MoEF to set up a special committee to "monitor the compliance to the environment clearance" thus granted. 

The bench said appointment of Meena Gupta as chairman of the committee to review theenvironmental clearance showed "departmental bias" as she had only "supported" the environment clearance granted to Posco earlier during her tenure as the Secretary, the MoEF. 

"The entire process was vitiated in the eyes of law," the bench said in this regard. 

The tribunal also said that the project proponent should generate its own source of water instead of utilising the drinking water meant for the Cuttack city in Orissa. 

"In the country drinking water is scarce. It would be better to ask the project proponent to generate its own source of water. Avoiding utilising water meant for Cuttack city could be asked by the ministry," it said. 

The order came on a plea filed by environment activist Prafulla Samantray seeking quashing of the environmental clearance granted to Posco on the ground that it was "contrary to the provisions of the EIA Notification 2006" and was "illegal and arbitrary". 

Advocate Ritwick Dutta, appearing for the petitioner, had said that impact on environment in case of steel production by the plant to its full capacity would be much more. 

Prafulla, in his petition said, "It is admitted that the project will not be viable if it is restricted to the steel production of only 4 MTPA. In such circumstances, the EIA report should have been for 12 MTPA (of steel production). The project proponent has opted to do an EIA for 4 MTPA since the likely impact of 12 MTPA is bound to be much more and very significant". 

Posco India Pvt Ltd was granted environmental clearance for its two projects, steel-cum-captive power plant project and captive minor port, in Jagatsinghpur district of Orissa in 2007. 

The MoEF after reviewing the same, granted environmental clearance with additional conditions on January 31, 2011 which prompted the petitioner to move the tribunal. 

The clearance was assailed contending that "the whole approach of the Expert Appraisal Committee (EAC) was not to give an unbiased opinion, but rather to justify the decision to grant environmental clearance to both the projects." 

The environment ministry, however, had told the tribunal there was no infirmity in its decision to grant environmental clearance to Posco. 

Posco had also maintained that it has not violated any law and is working in compliance with the norms.

Defence systems need to be upgraded, transparency in procurement required: Anand Mahindra

Mahindra & Mahindra on Friday announced formation of two separate joint ventures in defence sector targeting a minimum turnover of $1 billion in the next ten years. The joint venture (JV) partners will invest Rs 200 crore in the two new entities. 

The first JV is between Mahindra & Mahindra and government of Israel-owned Rafael Advanced Defense Systems and another one is with US-based Telephonics Corporation. 

In the wake of bribery allegations, Mahindra & Mahindra Vice Chairman and Managing Director Anand Mahindra said the government needs to revamp and bring in transparency in defence procurements. 

Anand Mahindra in an interview with ET Now, spoke about the joint venture with 'Rafael' and how he is looking forward to opening up of foreign investment in defence. Excerpts:- 

ET Now: What kind of JV is this with Rafael and how will it benefit you? 

Anand Mahindra: The Rafael JV is with a sizable Israeli company, roughly about $2 billion. What we are excited about is that it is about hi-tech systems. When people think of defence, they think of guns, levy trucks. Increasingly though, the most important element of defence expenditure is going to be in systems. What makes this hardware intelligent, how hi-tech are our systems? That is going to make the difference between victory or loss in battles of the future. 

That is where India needs to make investments. This JV is towards that objective. Rafael brings in very advance systems of surveillance, response. We are going to bring Rafael technology to bear on the FICV bid. If we are fortunate enough to be chosen for that procurement, then Rafael will provide the weaponry, response mechanisms on that system. It is a beginning of something which is going to be much larger. 

ET Now: What kind of investments are going to be put into it? What kind of revenue contribution will it give you in the next 5 and 10 years? 

Anand Mahindra: We are beginning with a Rs 100 crore investment which will be in the ratio of the equity ownership, which under current regulations is 74:26. As we go long we are looking at a business of roughly half a billion dollars over 10 years which works out to about $50 million a year. However, if we do win in the FICV bid then this revenue could climb to a billion dollars over the next 10 years. 

ET Now: What kind of change do you want in defence procurements? 

Anand Mahindra: Transparency. The system's know how, the processes, the very transparent processes that exist in the best private sector companies for any kind of procurement process. What people want to know is 'why (are) we buying something', 'what is its cost', 'what exactly was its competition', 'what are its technological features', 'why was it chosen'. 

I believe there is no harm in enunciating and being transparent about that, which is what we will do in all our ventures for defence production. This is the real time for the government to make good its promise of involving the private sector to a much greater degree in defence procurement. If they do, then what you will immediately get is transparency and technology which is a hallmark of the joint ventures that we announced today. 

ET Now: Can middleman be allowed in India? 

Anand Mahindra: I do not want to comment on those because those are not important (sic), whatever the value chains that you have, the word middleman is a bad word. In many areas the polite word is intermediaries. 

If there is value in intermediation terrific that is fine. To me that is not the point, the point is transparency. Not whether you have an intermediary or not. The question is how transparent are we about our processes. 

ET Now: You said that as an Indian it worries you about certain reports that 90% of the Indian air force equipment is obsolete. 

Anand Mahindra: Somebody asked me if I was worried about that particular report. I did not want to comment on that report because I have no knowledge about that report. I am not privy to that. Am I worried about whether we are adequately prepared? Yes of course. Our systems and hardware need to be upgraded dramatically. We have fallen behind on many schedules in all the armed forces. As an Indian, I am worried. 

ET Now: You have always batted for more than 26% FDI in defence, it is not happening now do you still demand more? 

Anand Mahindra: We batted right from the beginning of our JV with BAE. We batted very strongly that 49% was certainly valid and justified and we continue to bat and we continue to hope. 

ET Now: It was public that you were bidding for SAP, are you still in the race? 

Anand Mahindra: I do not think anything was public and our stand has always been the very cliched comment that we do not comment on speculation. 

ET Now: You opted out of Air India at a very right time. What do have to say about Air India? 

Anand Mahindra: I opted out because we have very big plans in aerospace. I felt it is a conflict of interest. It would be improper for me to comment because the board is working on transaction and given that I was privy to information while I was there, it would be highly inappropriate for me to comment.

Mahindra & Mahindra forms two JVs in defence; targets $1 bn in 10 years

Mahindra & Mahindra today announced formation of two separate joint ventures in defence sector targeting a minimum turnover of USD 1 billion in the next ten years. 

The joint venture (JV) partners will invest Rs 200 crore in the two new entities. 

The first JV is between Mahindra & Mahindra and government of Israel-owned Rafael Advanced Defense Systems and another one is with US-based Telephonics Corporation. 

The Indian partner will own 74 per cent stake in each, and the remaining 26 per cent will be with be the respective international entities. 

"What we are seeing Mahindra & Mahindra do is to focus on where India needs to go in future," Mahindra & Mahindra Vice Chairman and Managing DirectorAnand Mahindra told reporters while announcing the new ventures. 

The JV with Rafael will focus on development and manufacturing of products such as Torpedo Defence Systems, Electronic Warfare Systems, Advanced Armour Solutions and Remotely Operated Weapon Stations for Futuristic Infantry Combat Vehicles (FICV). 

"Over a period of ten years, we are looking at a turnover of USD 500 million from this JV and if we are selected for the supply of FICV by the government of India then we expect that the turnover would immediately become one billion dollars," Mahindra said. 

Mahindra & Mahindra is one of the four companies which have received Expression of Interest (EOI) to supply around 2,000 units. 

An initial investment of Rs 100 crore in the JV with Rafael will be made. The JV will also set up a facility in Pune where mostly naval systems will be made, he said. 

Commenting on the JV with Telephonics Corporation Mahindra said: "A similar amount of investment is being made by the partners and in the next ten years, we are expecting turnover of half a billion dollar." 

This JV has been set up primarily for Surveillance Radar Systems, Identification Friend or Foe (IFF) and Communication Systems. 

In addition, the JV also plans to provide systems for air traffic management services, homeland security and other emerging surveillance requirements. 

The joint venture will set up a facility by early next year in Bangalore, Mahindra added.

Euro bailout fund will be $1.1 trillion: Austria

DENMARK: Austria's Finance Minister Maria Fekter says the 17 euro countries will build a 800 billion euro ($ 1.1 trillion) financial firewall against their debt crisis, though 300 billion euro ($ 400 billion) of that has already been used for previous bailouts. 

That gives the euro-zone some 500 billion euro in fresh money to help debt-ridden countries. Fekter said yesterday Friday that this figure should send a convincing message to financial markets and the euro-zone's international partners that the currency union can contain its two-year old debt crisis. 

The euro-zone is under pressure to build a strong defense against further financial problems among its members. Some 300 billion euro in financial help has already been used to bail out Greece, Ireland and Portugal. Many economists fear that without a sufficiently large financial safety net, big economies like Italy or Spain could also come under threat. 

While the 800 billion euro ceiling is much higher than the 500 billion euro limit that had been agreed last year, it still falls short of the 1 trillion euro that international institutions like the International Monetary Fund and the Organisation for Economic Cooperation and Development had suggested. 

To ease the transition from the euro-zone's interim bailout fund, the European Financial Stability Facility, to its new rescue vehicle, the European Stability Mechanism, some 240 billion euro left in the EFSF will remain available until mid-2013. 

The ESM is supposed to come into force in July. Fekter said that allowing the two funds to run in parallel for one year will give the euro-zone time to build up the ESM closer to its full 500 billion euro capacity. 

The ESM depends on a 80 billion euro capital base, which is backed bu by 620 billion euro in guarantees from its member governments, which it can then use on the financial markets to raise money. The capital base will be paid into the ESM in several installments until 2014. 

However, Fekter stressed that the 240 billion euro that is still left in the EFSF could only be used as a last resort and if agreed by all the euro countries.

Infosys, TCS, Sify bag Postal Department's technology projects

The Department of Post (DoP) has issued Letters of Intent (LoIs) to Infosys, TCS, Sifyand Reliance Communications Infrastructure for different technology advancement projects. 

"Department is trying to induct technology in a big way. There are eight RFPs (Request for Proposal) we have floated and issued Letter of Intent in five (projects) to companies which include Infosys, TCS, Sify and Reliance," Secretary (Posts) Manjula Parasher told reporters here. 

The Department has got approval of Rs 1,877.2 crore to be spend across these projects over period of two years and will seek additional funds when the need arises. 

"Funds of Rs 1,877.2 crore have been approved. We will go ahead with that. We may need more money because implemented in some of the cases may last over period of six and half to nine years," she said. 

DoP has issued LoI to Infosys for two projects which are Rural System and Financial Services Integration, Tata Consultancy Services for Change Management, Sify for Network Integration and Reliance Communications Infrastructure for Data Centre. 

She said contract agreement with these companies will be signed shorty after these projects will start. 

Under technology advancement program, DoP will put all necessary softwares in place along with procurement of requisite IT hardwares. 

Secretary (Posts) added that the department will computerise all its 1.55 lakh post offices across country by 2013 with over 24,000 department post offices already computerised by month end.

Warning over North Korea rocket flight path

An official says a North Korean rocket due to be launched next month may affect an area between Australia, Indonesia and the Philippines.

US Assistant Secretary of State Kurt Campbell is reported to have asked the three countries to condemn the launch.

North Korea says the rocket will take a new southern trajectory instead of a previous route east over Japan.

Japan is readying anti-missile defences around the southern islands of Okinawa, which could be under the flight path.

North Korea says the rocket is intended to put a satellite in space, but the US and others say the launch is a cover for a long-range missile test - a potential delivery system for nuclear weapons.

The launch is expected to dominate a security summit on Monday in the South Korean capital Seoul, which will be attended by US President Barack Obama.

Australia's Sydney Morning Herald said Mr Campbell had briefed Australian Foreign Minister Bob Carr on Friday on the rocket's southward trajectory.

"If the missile test proceeds as North Korea has indicated, our judgment is that it will impact in an area roughly between Australia, Indonesia and the Philippines," the paper quoted Mr Campbell as saying.

"We have never seen this trajectory before. We have weighed into each of these countries and asked them to make clear that such a test is provocative and this plan should be discontinued."

BBC Asia analyst Charles Scanlon says Pyongyang appears to be trying to soften the political impact of its planned rocket launch.

It has chosen a new southerly route mainly over open sea, avoiding what is regarded as a more provocative easterly trajectory over the main Japanese island.

North Korea's state-run KCNA news agency said: "A safe flight orbit has been chosen so that carrier rocket debris to be generated during the flight would not have any impact on neighbouring countries."

North Korea has shown a growing mastery of ballistic technology during its three previous long range tests.

However, experts say that none has succeeded in reaching orbit, and debris has fallen to earth at various stages during the launches.

Pyongyang said last week that the launch - between 12 and 16 April - would mark the 100th birthday of its late Great Leader Kim Il-sung.

 

Maruti to invest Rs4,100 cr in FY13

 

By 2014 the company’s overall diesel engine capacity will be 700,000 units annually, said RC Bhargava, chairman, Maruti Suzuki

New Delhi: Country’s largest car maker Maruti Suzuki India Ltd said on Saturday that it will invest Rs4,100 crore in the next fiscal year largely to increase its capacity for diesel engines, research and development (R&D) work and expansion of vehicle manufacturing capacity.


The company will invest Rs900 crore for its first diesel engine plant, which will come up at its Gurgaon plant by the middle of 2013, it said. The plant will have an initial capacity of 150,000 units of diesel engines annually. Mint reported this on 14 December.




“Diesel car demand will continue to grow in India,” RC Bhargava, chairman, Maruti Suzuki said after company’s board meeting.
“The extent of the growth will depend on the capacity one has for diesel engines,” he added.


The company said its diesel engine plant at Gurgaon will also go for a second phase of expansion, which will take its overall capacity to 300,000 units. This expansion will require an investment of an additional Rs800 crore that will be made in the next financial year.


Bhargava said the sales of diesel cars have grown by 35% in FY12 while the company sold 15% fewer petrol cars in this fiscal.


By 2014, he said, the company’s overall diesel engine capacity will be 700,000 units annually. These include 100,000 units every year, which it sources in on a contract basis from Fiat India Powertrain Ltd. Suzuki Powertrain India Ltd, a 70:30 joint venture between Suzuki Motor Corp and Maruti Suzuki, supplies 300,000 diesel engines to Maruti’s operations.


Bhargava said that petrol cars will see a de-growth even in FY13. “But we will still be able to grow at 10%,” he said. “As we will be selling 50,000 less petrol cars but 150,000 more diesel cars.”


The car maker will also spend Rs900 crore on its R&D facility in Rohtak. Rest of the Rs4,100 crore will be invested on plant C at its Manesar unit, which will come up by the end of 2013.


The company will take a final call on its Gujarat plant by June this year while it will finalize the land purchase deal in the next 6 weeks.

TRAI Simplifies Life for Mobile Users Starting Today, March 21st, 2012

 

Telecom Regulatory Authority of India (TRAI) the regulatory body seeks to ensure Quality Of Service (QOS) across telecom operators in the country. On 6 January 2012 it outlined several guidelines via Directive no. 308-5/2011-QOS dubbed as TELECOM CONSUMERS PROTECTION REGULATIONS 2012, as earlier we shared on TelecomTalk. On 21 March 2012 these directives need to be implemented starting today.

 BSNL will be the first telecom operator which has already announced the implementation of all new guidelines for its prepaid 2G and 3G Mobile service and all other operators will also follow the same.

Following are the benefits the new guidelines bring to consumers:

Simplicity & standardization of tariff vouchers across operators.

Transparency for Value Added Services activated on the account.

Information on premium rate VAS.

Changes which would be ‘seen’ by consumers from now onwards:

New Start Up Kit:

Will contain only the SIM with no rate plan attached (no confusion of tariffs for the customer).

New Vouchers :

Only 3 voucher types will exist (Plan Voucher, Top-up, STV) (easy to differentiate between talktime vouchers against tariff benefits).

Plan Vouchers :

These would offer only the basic plan, with no talktime attached.

Top-Up Vouchers :

These would provide only talktime (in Rupees) with main account validity.

STV Vouchers :

These would provide only rate cutters, and no talktime.

Colour Coding :

The 3 vouchers would be segregated by different colours, for ease of understanding by consumers.

Usage information :

Consumers would be informed of the usage after every call / data session / VAS activation. While this may be already available with several operators, the same has been now made mandatory.

Past Usage information:

Consumers can now avail their usage over the last 180 days by paying a fee of Rs. 50 per request. Details that would be made available are Calls / SMS / VAS / Roaming.

Account related information:

Consumers can also avail information about their accounts – Tariff plan activated / Account Balance / Active VAS details are now available via SMS to the customer.

Premium VAS Service:

Consumers will be informed that the number they are calling is chargeable, and after a ‘beep’ the VAS service would be connected, thereby offering consumer greater awareness of the tariffs.

Iran oil sanctions: India requests US & Europe to consider its oil needs

 



India will continue to import oil from Iran without violating any international law and has requested the United States and the European Union to take into account the country's oil needs, India's oil minister said on Friday. 

"We have a systematic plan for receiving oil from Iran," Jaipal Reddy told reporters at the Asia Gas Partnership Summit, but did not elaborate. 

The United States gave exemptions on Tuesday from its crippling financial sanctions to Japan and 10 EU nations it said had cut purchases of Iranian crude, but left Asian economic giants India and China exposed to the risk of such steps. 

"We continue to receive representations from the US and other countries. With respect to their sentiments, we have requested to appreciate our needs," Reddy said. 

India is Iran's second-biggest oil client after China and Tehran used to supply about 12 per cent of the south Asian country's needs, worth about $11 billion a year. 

Reddy also said there would be no supply shortage. India, publicly disdainful of sanctions to pressure Iran, is privately pushing its refiners for substantial cuts in imports from the Middle Eastern country. 

Indian state refiners planning to cut the size of their term deals with Iran have sought additional supplies from the world's top oil exporter, Saudi Arabia, and fellow OPEC member Iraq. 

Will India's vote drive Sri Lanka closer to China?

 India has made it clear to Sri Lanka that its vote on the US-backed resolution was aimed at speeding up the reconciliation process in the island nation, but the move has sparked speculation whether it was a strategic misstep that could drive Colombo closer to Beijing. 

Given strong domestic political sentiments in Tamil Nadu over alleged atrocities against Tamils during Sri Lanka's war on Tamil Tigers that ended in 2009, India's options on the resolution at the UN Human Rights Council were severely circumscribed. 

But there was more to India's vote than the oft-touted domestic political compulsions. 

Informed sources point out that what led New Delhi to vote in favour of the resolution was the slow pace of the reconciliation process in Sri Lanka after decimating the LTTE and the lack of progress in implementing the recommendations of the Lessons Learnt and Reconciliation Commission (LLRC), a panel set up by the Sri Lankan government to investigate charges of human rights violations. 

In a detailed note explaining New Delhi's vote, India's external affairs ministry reminded Colombo of implementing its own LLRC's recommendations and stressed that "there is a window of opportunity to forge a consensual way forward towards reconciliation through a political settlement respecting all ethnic and religious groups inhabiting the nation". 

"It was not a vote against Sri Lanka. It was mainly a vote for getting Sri Lanka to implement the recommendations of the LLRC," Varadaraja Perumal, former chief minister of Sri Lanka's Tamil-majority North-Eastern Province, told IANS. 
 

Under the circumstances, India, said the sources, did the best it could. India got the US to accept two crucial amendments that made the resolution "non-intrusive", with an emphasis on Colombo's sovereignty. 

The Sri Lankan government has sought to put up a brave face, saying they understood India's political compulsions and the vote won't harm strong bilateral relations. 

However, given the pattern of voting - China and Pakistan were among those who voted against the resolution - there is an unstated anxiety in New Delhi that the vote may have opened strategic space for China to deepen ties with Sri Lanka. 

Lt. Gen (retd). A.S. Kalkat, who led the Indian Peacekeeping Force (IPKF) into Sri Lanka following the 1987 India-Sri Lanka accord, has cautioned that India needs to proactively engage Sri Lanka to ensure that the Chinese don't gain an upper hand there. 

"There are strategic security concerns. We can't afford to let the Chinese have an overwhelming presence in Sri Lanka. Sri Lanka is critically important to the security of our maritime security," Kalkat told IANS. 

Perumal is sceptical of the Chinese threat to India's interests in Sri Lanka. "The Sri Lankans are not pro-Chinese. Sri Lanka realises that they can't develop a relationship with China that will harm New Delhi." 

Kalkat feels that much will depend on how India mends fences with Sri Lanka after the vote and at the same time encourages it to deliver on key proposals of the 13th amendment for the devolution of powers that formed the core of the 1987 India-Sri Lanka accord. 

But, as of now, India will be closely watching the next steps initiated by the UNHCR and ensure that Colombo's sovereignty is not compromised in the process. At the same time, New Delhi will also keep a sharp eye on Beijing's moves. 

The stakes are high: China has emerged as the biggest lender ($1.2 billion) to Sri Lanka and has invested in airport, power plants, roads and bridges. China is also building the $1 billion Hambantota port, a showpiece project of President Mahinda Rajapaksa. 

Rajapaksa is reported to have visited China at least five times during his tenure. Chinese businessmen and tourists are going to the country in increasingly larger numbers. 
 

Three years ago, Sri Lanka opened a second consulate in China in Chengdu where Pakistan already has a consulate. India is still Sri Lanka's largest trading partner, but trade between China and Sri Lanka is now more than $2 billion. 

For now, despite the rivalry with China, India can take solace from Rajapaksa's assurance. 

"Our neighbours are Indians. I always say, Indians are our relations," he has said famously. "From the time of Asoka, we have had that culture, but that doesn't mean we won't get commercial benefits from others; from China, or Japan, or whoever. They will come here, they will build and they will go back. India comes here, they will build and they will stay. This is the difference."