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,
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closer relations with the West were established & compromise arrangements were made for recompensing 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, the forming rivers slowly spectacular meander waterfalls. In their lower courses, 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 sixyear 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

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Irrigation, water management, ports & aviation: Chamal Rajapakse 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:

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 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.
 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 (%) LABOR TAX & CONT. OTHER TAXES TOTAL TAX RATE (% PROFIT) 63.7 Paying Taxes in Sri Lanka Paying Taxes data Rank Time (hours) Total tax rate (% profit) Payments (number) Sri Lanka is ranked 164 overall for Paying Taxes. 2007 256 61.9 62 2008 159 256 63.7 62 2009 164 256 63.7 62 (%) 6.50 16.9 20.3

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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 Luxembourg Sweden Vanuatu Selected Economies Sri Lanka 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 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. Payments (number) Time (hours) 59 2 8.4 Total tax rate (% profit)

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256

63.7

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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 exportoriented 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.

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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.

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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.

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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 Sri Lankan rupee (LKR) Calendar Year 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% Currency Fiscal year Trade organizations Industry: Labor force Labor force - by occupation: 29.9% Services: 58.4% (2007 est.) 7.489 million (2007 est.) Agriculture: 34.3% Industry: Services: Unemployment rate: 6% Household income or consumption Lowest by percentage share: Distribution of family income: Budget: Highest 50 Revenues: 25.3% 40.4% 10%: 1.1% 10%: 39.7% $5.384 billion
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Public debt: Inflation rate (consumer prices): Central bank discount rate: Commercial bank prime lending rate: Agriculture - products: Industries:

Expenditures: $7.608 billion 85.8% of GDP 15.8% 15% 17.08% Rice, Sugarcane, Grains, Pulses, Oilseed, Spices, Tea, Rubber, Coconuts; Milk, Eggs, Hides, Beef; Fish etc. Processing of rubber, Tea, Coconuts, Tobacco & Other Agricultural Commodities; Telecommunications, Insurance, Banking; Clothing, Textiles; Cement,

Industrial production growth rate: Electricity - production: Electricity - consumption: Current account balance: Exports: Exports - commodities:

Petroleum Refining etc. 7.6% (2007 est.) 8.317 billion KWh (2006 est.) 6.884 billion KWh (2006 est.) $1.019 billion (2007 est.) $8.135 billion f.o.b. (2007 est.) Textiles & Apparel, Tea & Spices; Diamonds, Emeralds, Rubies; Coconut Products, Rubber Manufactures, Fish etc. US 25.5%, UK 13.2%, India 6.7%, Germany 5.7%, Italy 5.1% (2007). $10.36 billion f.o.b. (2007 est.) textile fabrics, mineral products, petroleum, foodstuffs, machinery & transportation equipment etc. India 23.1%, Singapore 9.9%, China 8.2%, Iran 7.5%,

Exports - partners: Imports: Imports - commodities: Imports - partners:

Hong Kong 6.4% (2007) Reserves of foreign exchange & $3.644 billion (31 December 2007 est.) gold: Debt - external: $12.2 billion (31 December 2007 est.) Market value of publicly traded $7.769 billion (2006) shares: 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 89.6% of GDP $12.23 billion, (44.6% of GDP) $5.61 billion $8.39 billion $808 million (recipient)

Public debt External debt Revenues Expenses Economic aid

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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; fiberoptic 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 Telephones - mobile cellular Radio broadcast stations Television broadcast stations: Internet country code: Internet hosts: Internet users: 2.742 million (2007) 7.983 million (2007) AM 15, FM 52, shortwave 4 (2007) 14 (2008) .lk 4,940 (2008) 771,700 (2007)

Transportation System Airports: Airports - with paved runways: Airports - with unpaved runways: Railways: Roadways: 18 (2007) total: 14 total: 4 total: 1,449 km, broad gauge: 1,449 km 1.676-m gauge (2007) total: 97,286 km, paved: 78,802 km,unpaved: Waterways: Ports & terminals: 18,484 km (2007) 160 km (primarily on rivers in southwest) (2006) 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

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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

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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 Population growth rate Projected population in 2025 Projected population in 2050 Population density Share urban Share rural Birth rate: Death rate: Total fertility rate: Age structure: 21,128,773 (2008) 0.94 percent (2008 ) 23,707,228 (2025 ) 24,920,558 (2050 ) 845 persons per sq mi (2008 ) 326 persons per sq km (2008 ) 21%(2005 ) 79%(2005 ) 16.63 births/1,000 population (2008) 6.07 deaths/1,000 population (2008 ) 2.02 children born/woman (2008 ) 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) Median age: Over 65 years: 7.9% (male 783,823/female 893,096) (2008) Total: 30.4 years Male: 29.5 years Sex ratio: Female: 31.4 years (2008 ) 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 Infant mortality rate: Total population: 0.97 male(s)/female (2008) Total: 19.01 deaths/1,000 live births Male: 20.76 deaths/1,000 live births 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

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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 Sri Lankan Moors Indian Tamil Sri Lankan Tamil Other Unspecified 73.8%, 7.2% 4.6% 3.9% 0.5% 10%

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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) Tamil (national language) Other English 74%, 18%, 8%, (English is commonly used in government & 10% population are able to speak ) Religious affiliations Buddhist Muslim Hindu Christian Unspecified Education & Skills Literacy definition: Age 15 & over can read & write. Total population: Male: Female: 90.7% 92.2% 89.2% (2001 census) 69.1% 7.6% 7.1% 6.2% 10%

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 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

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(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. 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

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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 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.

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

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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) days of is the country's most important & spectacular pageant, with 10 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 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 Perahera (January), held in

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& 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.

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PART -2 MARKETING AUDIT & MARKETING PLAN

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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)

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

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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 Rank Procedures (number) Duration (days) Cost (% GNI per capita) Paid in Min. Capital (% of GNI per capita) 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 2007 8 50 9.2 0.0 2008 29 5 39 8.5 0.0 2009 29 4 38 7.1 0.0

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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:

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The following table shows starting a Business data for Sri Lanka compared to good practice and comparator economies: Good Practice Economies Denmark New Zealand Selected Economy Sri Lanka Comparator Economies Afghanistan Bangladesh India Maldives Nepal 4 7 13 5 7 9 73 30 9 31 59.5 25.7 70.1 11.5 60.2 0.0 0.0 0.0 4.8 0.0 Procedures (number) Duration (days) Cost (% GNI per capita) 0.0 1 1 0.0 Paid in Min. Capital (% of GNI per capita)

4

38

7.1

0.0

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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 Rank Time (years) Cost (% of estate) Recovery rate (cents on the dollar) Benchmarking Closing Business Regulations: Sri Lanka is ranked 43 overall for closing a Business. Ranking of Sri Lanka in Closing Business - Compared to good practice and selected economies: 2007 1.7 5 50.6 2008 42 1.7 5 44.6 2009 43 1.7 5 43.4

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The following table shows Closing Business data for Sri Lanka compared to good practice and comparator economies: Good Practice Economies Ireland Japan Singapore Selected Economy Sri Lanka Comparator Economies Afghanistan Bangladesh India Maldives Nepal Recovery rate (cents on the $) 0.4 92.5 1 Time (years) Cost (% GNI per capita)

43.4

1.7

5

0 23.2 10.4 18.2 24.5

no practice 4.0 10.0 6.7 5.0

no practice 8 9 4 9

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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.

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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’

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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.

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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

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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 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 timeconsuming 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 Rank Documents for export (number) Time for export (days) Cost to export (US$ per container) Documents for import (number) Time for import (days) Cost to import (US$ per container) Benchmarking Trading Across Borders Regulations: Sri Lanka is ranked 66 overall for Trading Across Borders. 2007 7 25 797 12 26 789 2008 60 8 21 810 6 20 844 2009 66 8 21 865 6 20 895

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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 Practice Economies Denmark France Malaysia Singapore Selected Economy Sri Lanka Comparator Economies Afghanistan Bangladesh India Maldives Nepal Docun. for Ex. (no) 2 450 3 439 Time for Ex. (days) 5 2 Cost to Ex (US$/ cont.) Docu. for Im (no) Time for Im (days) Cost to Im (US$/ Cont.)

8

21

865

6

20

895

12 6 8 8 9

74 28 17 21 41

3000 970 945 1348 1764

11 8 9 9 10

77 32 20 20 35

2600 1375 960 1348 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  Brand Name  Product Type  Product Line :::

:-

Rice

Rainbow Rice Non Basmati Rice

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 "yesno" 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

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favor of a particular policy or plan, etc. The essence of quantitative research is that every respondent is asked the same series of questions. 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

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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.

PROMOTION 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 STRATEGIES
DISTRIBUTION 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 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 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 RICE
 Analyzing customers needs.  Establishing channel objectives.  Identifying the major channel alternatives.  Evaluating major channel alternatives.

MULTINATIONAL 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 DECISION
 Selecting channel member  Training channel member  Marketing channel member  Evaluating channel member

INTERMEDIARIES
 Retailer  Jobbers  Wholesaler  Industrial distribution  Manufacturer’s representative

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DISTRIBUTION
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 CHANNEL
INDIAN FARMER SUPPLIER (INDIA) PURCHASER (SRI LANKA) LOCAL DEALER RETAILER CUSTOMER

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PRICING 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 STRATEGIES
We have to set a price for the first time when we develop a new product.

NINE PRICE QUALITY STRATEGY FOR TEA
Premium strategy High value strategy Super value strategy Overcharging strategy Medium value strategy Good value strategy Rip off strategy False economy strategy Economy strategy = = = = = = = = = high price, high quality medium price, high quality low price, high quality high price, medium quality medium price, medium quality low price, medium quality high price, low quality medium price, low quality low price, low quality

PROCESS 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 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

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Discriminatory pricing: Customer segment pricing, image pricing, channel pricing, time pricing

PRICING 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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