Sri Lanka, India PMs agree to sign ETCA by year-end

New Delhi: India and Sri Lanka will sign the Economic and Technology Cooperation Agreement (ETCA) by the end of this year, Sri Lankan Prime Minister Ranil Wickremesinghe, said on Thursday.

Addressing the India Economic Summit organised by the World Economic Forum (WEF), Wickreme-singhe said, “The key thrust is our trade policy. Small domestic markets are insufficient to sustain growth. Therefore a shift to greater export orientation is required to achieve a growth of 8%. Hence our trade policy will focus on gaining access into the large markets,” he explained. “We are cognisant that the economic asymmetry between Sri Lanka and India is going to increase in the future when the latter emerges as a major global player in the increasingly multipolar world. The India Sri Lanka FTA will be further expanded and deepened to go beyond trading goods to cover trade in services, investments and technology cooperation,” Wickremesinghe said.

The Proposed Economic and Technology Cooperation Agreement will be signed by the end of this year, he said, adding that the ministers on the two sides are currently working on it. “Prime Minister Modi and I decided we must conclude it by end of this year.”

He pointed out that ETCA offers a strategic economic advantage to Sri Lanka and to the five fastest growing southern Indian states. “These five southern Indian states Karnataka, Andhra, Tamil Nadu, Kerala and Telangana have a population of 250 million people and a combined GDP of $ 450 million. With the addition of Sri Lanka’s 22 million at $ 80 billion economy, the GDP in this sub regional economy will cross $ 500 billion,” he said.

He added that along with the free trade agreement between Sri Lanka and Singapore, the Comprehensive Economic Partnership Agreement (CEPA) between India and Singapore and the ETCA between India and Sri Lanka will establish a tripartite agreement for trade and investments.

Speaking about Sri Lanka’s economic policy, the Premier said the better performing Asian economies allow Sri Lanka the space to carry out major reforms.

He said Sri Lanka will carry out reforms for macroeconomic stabilisation which is based on fiscal consolidation and the increase of tax revenue, which is expected to reduce the budget deficit to 3.5% by 2020. The stabilisation program will be accompanied by measures to restructure the economy which include exchange rate flexibility, and trade liberalisation to make Sri Lanka a platform for value addition.

“We are also liberalising the tariff and the non-tariff barriers that are denying enterprises the opportunity of gaining access to the latest technology and know-how, and depriving our consumers of the best quality of goods and services.”

“We also want to take measures to see a rapid improvement in ease of doing business by the early part of 2018.” the PM said adding that maximising these factors will transform Sri Lanka into a geo-economic centre in South Asia, dynamically and synergically engaged with the rest of the region.

The final target is a highly competitive social market economy, the Prime Minister said.