India and Sri Lanka Expand FTA: A Strategic Trade Agreement
News Today: India and Sri Lanka to Expand Free Trade Agreement
India and Sri Lanka are in talks to expand their Free Trade Agreement (FTA) to include a broader range of goods and services. Currently, India seeks customs duty concessions on items like cars, commercial vehicles, and machinery from Sri Lanka. Additionally, India has proposed easier visa norms to facilitate the entry of professionals.
The 14th round of talks between senior officials concluded recently in Colombo. Key issues discussed included rules of origin, goods, services, and technical barriers for trade. Sri Lanka has requested the removal of a quota on apparel exports and duty concessions on tea and certain agricultural commodities.
Due to upcoming elections in Sri Lanka, the next round of negotiations will occur post-elections. The India-Sri Lanka Free Trade Agreement (ISFTA), which came into effect in March 2000, primarily focuses on goods. Both countries are negotiating to transform this into a Comprehensive Economic Partnership Agreement (CEPA) that includes services and investment.
Under the existing FTA, India permits limited garment imports from Sri Lanka at a 50% tariff concession, provided Indian fabric is used. India also offers a 50% tariff concession on tea imports from Sri Lanka.
Sri Lanka has included automobiles and electrical goods on its negative list, restricting their import. Despite this, trade between the two nations has grown significantly since ISFTA’s implementation. In FY’2024, India’s exports to Sri Lanka were valued at USD 4.17 billion, while imports stood at USD 1.4 billion.
Experts from the Global Trade Research Initiative (GTRI) suggest that Sri Lanka’s request for garment quota removal might be challenging for India, given the increase in garment imports from Bangladesh under similar agreements.
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