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The Free Trade Agreement between India and Sri Lanka- ISFTA has been in function since 2000. This has allowed Sri Lanka to export over 4000 items to India, duty free.
The results have been favourable to Sri Lanka since the agreement was enabled. The average exports to India before 2000 was around $39m, since then there has been a rapid growth, according to the Sri Lanka Export Development Board average exports in 2005 and 2014 were $559m and $625m respectively.
Bilateral Trade, meanwhile, hit $4.6bn in 2014, up 23% year-on-year.
Even Though, the trade balance has expanded in India’s favour, only a small portions of good entering Sri Lanka market falls under ISFTA. 13% of goods were imported from India in 2013, compared to 65% of Sri Lankan exports to India, proposing overall changes in the trade balance are largely due to external factors separate from ISFTA itself.
Both nations have worked to improve the ISFTA into a comprehensive economic partnership agreement. However there are concerns such as inclusion services in trade, many people think that this will cause job deprivation in fields like ICT.
New Economic and Technology Cooperation Agreement (ETCA) which was introduced in 2016 with strong support from Sri Lanka’s private sector and strengthened by the main private sector advocacy group, the Ceylon Chamber of Commerce has created a new force.
The main aim of ETCA is to promote the partnership in technical area, scientific expertise and research among institutions, to improve the quality of goods and services and to open the door for human resource development training.
According to Mr. Samantha Ranatunga, chairman of the Ceylon Chamber of Commerce “We have been doing business with India for over 2500 years,” . He also added “With that in mind, there is simply no way we can keep India out of our economic equation. Broadly speaking, a practical approach must be employed. We cannot let overt nationalism blind us to the realities.”
Sri Lanka Profits from Trade with India
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