25th May 2010, www.dailynews.lk, Sanjeevi Jayasuriya
Sri Lanka’s overall trade with India is growing closer to six fold and exports from Sri Lanka are growing ten fold. The increased diversity with greater value addition in exports from Sri Lanka is a positive development. March 2010 marks ten years since implementation of the Indo-Sri Lanka Free Trade Agreement (ISFTA) and during this period trade between the two countries expanded rapidly.
Though, there have been teething problems and trade disputes it is important to assess the progress of ILFTA analyzing the positive and the negatives and take stock of how the Agreement should progress in the next decade.
Exports from Sri Lanka to India increased significantly recording US $ 58 million in 2000 to US $ 418.3 million in 2008.
Similarly the exports from India to Sri Lanka have also accelerated from US $ 600.1 million to US $ 3,443 million from 2000 to 2008.
The product base of Sri Lanka diversified largely during this time. In 1999 Sri Lanka exported products to India under 505 tariff lines whereas by 2005 the number of products augmented to 1,062 with several value added products.
By 2008, other than the traditional primary products such as pepper, waste and scrap steel, arecanuts, dried fruit and cloves, several value added products such as insulated wires and cables, pneumatic tyres, ceramics, vegetable fats and oils, refined copper products, apparel, pharmaceutical products and furniture were among the top exports from Sri Lanka to India.
Trade relations between Sri Lanka and India gained momentum since 1990 and grew rapidly as a result of the implementation of ILFTA.
India followed a reform agenda and has progressed much. The “new thinking” in India should be attractive to Sri Lanka. The country needs to take a cue from the statistical input and brilliant decision making process in India, Finance and Planning Deputy Minister Dr Sarath Amunugama said.
“The ILFTA is a restricted agreement as it gives preferences only to Sri Lanka and India. There is a major debate in the US and West on these free trade agreements considering the fact that we live in relatively small world.
The world has changed and we need to change accordingly,” he said.
The country is presented with an ideal situation now. Sri Lanka is ready for a spectacular take off. India and China would be the leading world economies and it will make South Asia a global hot spot.
It is important to develop incredible synergies to exploit the situation, Ceylon Chamber of Commerce Chairman Dr Anura Ekanayake said.
The ILFTA should look at from improving on good and reducing on bad. The agreement could be a platform for much wider relationship as Sri Lanka is high trade dependable.
The agreement should be outward looking and have a major role to play in increasing national investments up to the range of 40 percent which could not mobilize locally, he said.
A two-day conference on the India-Sri Lanka free trade agreement; achievements, challenges and the road ahead jointly organized by the Institute of Policy Studies of Sri Lanka, Centre for WTO Studies, Indo-Lanka Chamber of Commerce and Industry and the India Sri Lanka Joint Business Council was held yesterday.
Image: Finance and Planning Deputy Minister Dr Sarath Amunugama and Ceylon Chamber of Commerce Chairman Dr Anura Ekanayake
• Indo-Sri Lanka Free Trade Agreement is 10 Yrs Old
• Indo-Sri Lanka FTA (ISFTA) - Detailed Information - The Board of Investment of Sri Lanka (BOI)