Sri Lanka and India Seek to Double Trade by 2016

India remains a key trading partner for all South Asian countries and a centre of focus when it comes to moving the intra-regional trade agenda forward. In a new development this week, between two of the region’s oldest and strongest trading partners, Sri Lanka and India have agreed to further strengthen the bilateral trade, investment and economic ties between the two countries. This is set to include efforts to double trade to 10 billion US dollars over the next three years, remove non-tariff barriers and review negative lists. The two days of talks on trade, investment and Economic Cooperation took place in Colombo with teams led by Sri Lanka’s Treasury secretary P B Jayasundera and India’s Commerce Secretary S R Rao.

The bilateral trade turnover between the two countries had crossed the US $ 5 billion mark in 2011-12. India was Sri Lanka’s leading trade partner of Sri Lanka globally, India’s largest trade partner in South Asia is Sri Lanka. However, the trade turnover is not equally distributed and Sri Lanka has continued to experience a higher trade deficit with India.

“It was agreed that there was considerable potential to expand bilateral trade, in a balanced manner through optimal utilization of the opportunities available between the two economies”, Sri Lanka’s Ministry of Finance stated in a release after the talks.

india sri lanka trade talks

The Free Trade Agreement between India and Sri Lanka was the first ever bilateral trade agreement for both countries, signed in 1998 and enforced since 2000. In a recent event jointly organized by the Indian High Commission and the IPS, the ‘Handbook on the India-Sri Lanka Free Trade Agreement’ was launched in an effort to increase awareness of, and reduce misconceptions regarding the Free Trade Agreement.

Speaking at the event, Executive Director of the IPS, Dr. Saman Kelegama stated that prior to the launch of the Handbook, information with relation to the India-Sri Lanka Free Trade Agreement was scattered. This lack of a ‘one-stop-shop’ for information regarding the ISFTA was one of the main contributors to certain prevalent misconceptions held with regards to the FTA. He added that with this publication, the IPS hopes that, that gap would be filled. The Handbook, which was prepared by the IPS, explains the opportunities that exist for trade with India, and lists the mechanisms that could be used to deal with disputes that could arise in the process.

Handing over the first copy of the publication to Chief Guest at the event, Minister of Industry and Commerce, Hon. Rishad Bathiudeen, H.E. the High Commissioner of India, Ashok K. Kantha noted that the FTA has helped Sri Lanka increase its exports to India, while reducing the trade balance between the two trade partners. Going further to elaborate on the benefits of the ISFTA, he added that In the decade since it came in to effect, trade between the two countries has increased from USD 400 million to over USD 5 billion.

To know more about this latest development, we recommend the following news articles:

Sri Lanka Seeks Unrestricted Market Access from India (Ministry of Finance)

Sri Lanka, India in talks on boosting trade, investments (Lanka Business Online, 25th June 2013),-india-in-talks-on-boosting-trade,-investments/527793856

Sri Lanka seeks unrestricted market access from India for Sri Lankan exports (ColomboPage, 26th June 2013)