India–Sri Lanka relations - Wikipedia
The relationship between Sri Lanka and India has always been characterised by surprises, setbacks and progress, and the three years of the. In the investment field, India is among the top five foreign investors in Sri Lanka. Trade between Sri Lanka and India has grown rapidly after the entry into force of . Although trade relations between India and Sri. Lanka can be traced back to the pre-colonial times, the inward-looking policies of both the countries did not allow .
Though the ISFTA has facilitated to further strengthen the trade and economic relations between the two countries, economic asymmetries of the two countries have reflected in the overall trade.
India-Sri Lanka economic relations in Modi’s India | FT Online
India being a resourceful country with highly developed industries and secured market posses comparative trade advantages over Sri Lanka. The CEPA aims at promoting trade in both goods and services, facilitating greater investment flows and enhancing mutual cooperation in the sphere of overall economic relations.
To asses the current status of the bilateral relations and make recommendations on how to move the two economies towards greater economic integration through the conclusion of a CEPA, the then Prime Ministers of Sri Lanka and India in appointed a Joint Study Group JSG. The JSGco-chaired by Mr. Ken Balendra of Sri Lanka, concluded in that the accomplishment of the CEPA would take the two countries to a qualitatively new level of engagement by intensifying and deepening bilateral economic interaction.
The JSG recommendations include improvements to the current ISFTA, binding commitments in identified sectors in services, facilitation of investment flows and enhanced cooperation in the fields of education, culture, ocean resources exploration, health and medicine, agriculture, ferry services, development of railway etc. However, the two sides agreed at the Commerce Secretaries level meeting in August to refer to the JSG report as a useful reference document in the CEPA process, as it contains valuable recommendations, but not as the basis for Negotiations.
The two sides also agreed on two fundamental principles viz, to take in to account asymmetries of the two economies in all elements of negotiations and progressive and sequencing of liberalization in the Services sector. The binding commitments on trade in goods under CEPA would primarily relate to a reducing the size of the negative lists, in the current FTA, b more flexibility on rules of origin criteria, c elimination of non-tariff barriers, and d mutual recognition of products standards and conformity assessment.
As regards the binding commitments on trade in services, the bilateral negotiations will cover pre-identified service sectors, using the WTO General Agreement on Trade in Services GATS as the negotiating framework and its positive list approach. There was a time when copper was the largest export to India inlikewise vanaspathi in and areca nuts in These fluctuations do occur in FTAs, especially when shrewd entrepreneurs exploit loopholes in such agreements.
India-Sri Lanka economic relations in Modi’s India
The case of vanaspathi a type of processed vegetable oil highlights the volatility that can sometimes be brought about by distortionary protectionist measures in place. Indian investors began to process vanaspathi in Sri Lanka for export to India, due to the low preferential tariff rates that were available to Sri Lankan exporters, contributing to the surge in exports between and This eventually caused an outcry in India, leading to an imposition of quotas on vanaspathi imports from Sri Lanka.
This eventual imposition of quotas negatively affected close to 4, jobs in Sri Lanka. Having said that, the available data shows that, while Sri Lanka exported product items to India before the FTA inthe product items exported increased to byand to product items byafter the implementation of the FTA.
Moving Forward Sri Lanka should not lament about the trade deficit or the export basket, but move forward with the rest of the world to gain maximum benefits from FTAs.
Non-tariff measures are not barriers to all Sri Lankan exports, but for some of them, like marble, maggie boards, and perishable food items.
These barriers have been clearly identified through stakeholder consultation by the Department of Commerce. All such findings have now been submitted to the Indian Commerce Department for early resolution.India’s World- Sri Lanka in China's debt trap
The Government of Sri Lanka is attaching high priority to resolving these issues expeditiously. It will lay the foundation for Sri Lankan exports and investments to benefit more from the rapidly growing Indian market.