Local shoe makers lose battle to stop Indian entry

Sri Lankan shoe manufacturers and trade unions have lost the battle to prevent a large Indian shoe maker from entering the domestic market here.

When the National Labour Advisory Council ( NLAC) met on Tuesday, Labour Minister John Seneviratne informed council members that the Prime Minister had explained that it was difficult to reverse the decision and that such a move would have a negative impact on foreign investment.

The concerns of local shoe manufacturers against the entry of India’s Veekesy Slippers Lanka Pvt Ltd, which has already set up a factory in Negombo, into the domestic sales market was also raised at the Cabinet Committee on Economic Management ( CCEM) but ended with the same result; any reversal will adversely impact on future foreign investment.

The matter was first raised at a meeting of the NLAC in late November by Palitha Athukorala, Secretary of Industriall Sri Lanka Council to which Labour Minister Seneviratne – who also expressed opposition to the Indian footwear entry – had said he would take up the matter with the government and the CCEM.

The Indian company has got approval under Section 16 of the Board of Investment rules which allow projects with a minimum US$250,000 investment. This section permits investors’ unlimited access to years workers are productive and the rise in an aging population is also a reason for extending the retirement age. Representatives of the private sector however opposed the proposal on the grounds that employers have the right to decide on the retirement age and follow laid-down customary practices on retirement.