FINANCIAL CHRONICLE – Sri Lankan companies need to look beyond domestic markets for growth and must possess a deep understanding of the tax and regulatory framework to ensure success in foreign markets, according to Deloitte Sri Lanka.
Channa Manoharan, Country Managing Partner of Deloitte Sri Lanka and Maldives, emphasized the importance of grasping on-ground realities, including tax and regulatory frameworks, and making meaningful collaborations to ensure success in foreign markets, whether as exporters or through various forms of strategic partnerships.
He made these remarks at Deloitte’s exclusive senior-leadership forum titled “Growth Beyond Borders: Pathways for Sri Lanka’s Consumer Sector,” held on March 4 at the Sapphire Hall, Courtyard by Marriott. The event convened leaders and decision-makers from Sri Lanka’s prominent consumer-sector companies to explore opportunities for regional expansion, particularly into India, one of the fastest-growing consumer markets in the world.
Tiyasa Khanra, Partner at Monitor Deloitte, addressed three key questions in her keynote speech: (1) Where can Sri Lankan consumer brands win cross-border? (2) Why is India an attractive market? and (3) What does it take to enter and succeed in new markets? She discussed key demographic and consumer trends, alongside benchmark indicators useful for assessing the potential of a new market. Additionally, she briefly profiled the fast-growing, scaled consumer economies in Asia, such as India, Bangladesh, and Vietnam, which offer attractive growth rates and demographics.
In her assessment of India as a potential market, she highlighted the country’s strong macroeconomic fundamentals and noted that India’s young population, along with an expanding middle-income and working population, will drive consumption-led expansion. She provided valuable insights on Indian consumers, who are becoming increasingly brand conscious, with purchasing decisions shifting from price-driven to value-driven, indicating a growing demand for trusted and differentiated brands.
While acknowledging the significant opportunities in the market, she also pointed out that India presents several complexities, including fragmented markets, a large unorganised retail sector, and intense competition. Nevertheless, she observed that multinational consumer companies that maintain long-term investments in the market often experience stronger growth prospects and higher margins.
The keynote address was followed by a panel discussion moderated by Ruvini Fernando, Head of Strategy, Risk, and Transactions at Deloitte Sri Lanka and Maldives.
The panel featured Cedric Wijegunawardene (Chief Financial Officer – Silvermill Group of Companies), Rukshila Gooneratne (Operations Officer, Country Management Unit, IFC Sri Lanka & Maldives), Vivek Gupta (Partner – M&A and Private Equity & Financial Services Tax, Deloitte South Asia), Soumya Dwibedi (Partner – Monitor Deloitte), Tiyasa Khanra (Partner – Monitor Deloitte), and Charmaine Tillekeratne (Partner – Head of Tax – Deloitte Sri Lanka & Maldives).
The discussion commenced with Cedric Wijegunawardene sharing his experiences working with multiple companies that have successfully ventured overseas. He referred to the Silvermill Group, whose revenue is primarily driven by exports and which has established operations in Indonesia and India. He highlighted several key considerations for entering foreign markets, including the necessity for patience in realizing returns from cross-border ventures and the importance of conducting thorough due diligence and feasibility assessments.
He noted that these processes may be further enhanced by involving a multilateral lender depending on the size of the investment. He also stressed that strict legal compliance, including adherence to environmental, social, financial, and labor regulations, is essential.
Soumya Dwibedi, Partner at Monitor Deloitte, provided in-depth insights on identifying the right market and the right partner, taking into account both macro and micro factors to ensure competitiveness in the market. He emphasized the importance of differentiating between locations chosen for consumer markets and those selected for manufacturing, as each involves distinct decision-making considerations.
Rukshila Gooneratne shared insights on how the International Finance Corporation (IFC), the private sector arm of the World Bank Group, provides growth capital and other non-financial support for companies exploring cross-border opportunities with strong growth potential, while also offering guidance on compliance and governance standards expected by global investors. IFC, through its Sri Lanka office, has invested close to US$1 billion in Sri Lankan corporates over the past five years.
Deloitte’s tax experts Vivek Gupta and Charmaine Tillekeratne underscored the importance of conducting detailed assessments of regulatory requirements, including potential benefits from existing Free Trade Agreements, when exploring new markets. In response to questions about establishing trading offices in hubs like Dubai and Singapore, Charmaine noted that while this is a feasible operational model, investors must be mindful of the principle of “substance over form” within the value chain. Vivek further emphasized the need to consider risks related to Permanent Establishments when setting up such trading entities.
The value of strong and reliable partners, data-driven and credible business plans, and the importance of a long-term perspective were sentiments echoed by all panelists throughout the discussion. The panelists also highlighted the significance of robust environmental, social, and governance standards, which are essential for accessing foreign capital.
Deloitte, leveraging the collective expertise of its global network, reaffirms its commitment to supporting companies through every phase of their international expansion journey—from strategy formulation and market assessment to regulatory navigation, identifying credible partners, tax planning, and on-ground execution for successful launch and scale-up across key regional markets.
