Trade between Sri Lanka and India has grown from $544 million in 1999 to $3,368 million in 2008 since the signing of the Indo-Sri Lanka Free Trade Agreement (ISLFTA), with Sri Lanka’s exports rising "substantially" in value, and number of products exported increasing "threefold," and India to Sri Lanka imports going up even further.
However, while 70% of the increase in Sri Lanka’s exports to India was aided by the preferential access granted by being named on India's positive list, 70% of the increase relating to Indian exports involved Sri Lanka’s negative list and, as such, did not benefit from preferential access. This was revealed at a recent Pathfinder Foundation-organised workshop titled "Conquering the Indian Market: Strategic partnership for policy development and action to foster regional co-operation in South Asia.”
Additionally noted, "while Sri Lankan exporters benefited greatly from the preferential access provided by the ISLFTA, Indian exporters largely entered Sri Lankan market because they were internationally competitive. The rise in Indian imports has, thereore, had the added benefit of lowering costs for Sri Lankan producers and consumers."
The workshop also suggested that "Sri Lanka could benefit from a pruning of the negative lists. There are 22 products on the Indian negative list where Sri Lanka has export potential. India has six such products on Sri Lanka's negative list." Further, it was also revealed that the "margin of preference available under the ISLFTA has been eroded, in recent years, due to unilateral tariff liberalisation.
It is now argued that liberalisation in services and cooperation in investment are urgent needs to maintain the momentum in Indo-Lanka trade growth. This can be done by moving to the next platform, such as a comprehensive economic partnership agreement." (JH) |
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