Trade Agreement Between India And Sri Lanka

Recently, with the change of government in Sri Lanka in 2015, talks resumed under a new framework, the Economic and Technological Cooperation Agreement (ETCA). The ETCA agreement aims to promote cooperation in technical fields, scientific expertise and research between institutions, improve standards for goods and services capable of competing in the global market, and improve opportunities for workforce training and human resource development. In order to address the main concerns of Sri Lankan stakeholders (who prevented the signing of the EPA), particularly with regard to services, i.e. the free movement of professionals, India plans to send qualified personnel to the information technology and shipbuilding sectors, which require expertise and a higher level of training. These are also sectors that could boost Sri Lanka`s exports. Discussions were also held on the signing of mutual recognition agreements in the product sector to improve market access for Sri Lankan products to India. The signing and implementation of ETCA will be a decisive reform to improve the economic partnership with Sri Lanka. (i) the crossing is justified for geographical reasons or by considerations related exclusively to transportation needs; (ii) products are not marketed or consumed; and (iii) the products have not undergone any operation other than unloading and transloading or an operation necessary to keep them in good condition. Pl. visit India`s website for ISFTA tariff concessions and other India customs information: www.indiantradeportal.in/index.jsp While Sri Lanka is not a very important trading partner of India (with a negligible share in India`s exports and imports), India is Sri Lanka`s largest trading partner, with 16% of Sri Lanka`s total trade with the world. Sri Lanka`s other major trading partners are China, the United States, the United Kingdom, Vae and Japan.

A significant change in recent years is a marked improvement in China`s share of Sri Lanka`s total trade from 5% in 2007 to 14% in 2017. This is particularly important for imports. India has traditionally been one of Sri Lanka`s main sources of imports. In 1999, about 10% of Sri Lanka`s total imports came from India, which rose to 21% in 2017. However, in recent years, imports from India have been characterized by fierce competition from imports from China. China`s share of Sri Lanka`s total imports rose from 8% in 2007 to 20% in 2017. In order to promote bilateral trade, India and Sri Lanka signed the India-Sri Lanka Free Trade Agreement (ISFTA) on 28 December 1998, which came into force on 1 March 2000. The ISFTA grants goods duty-free access and tariff preferences, with the exception of those on the negative list. The negative list includes 431 products on the Indian side and 1,220 products on the Sri Lankan side. In addition, India has imposed a tariff quota (TRQ) for clothing (8 million units) and tea (15 million kg) and certain import ports for these items in order to benefit from preferential tariffs. India also added the requirement that Sri Lanka should source fabrics from India for 6 of the 8 million garment items in order to qualify for preferential duty.

Several changes have been made to the agreement in recent years. For example, port restrictions on imports from Sri Lanka have been lifted.