CNCI concerned about proposed ETCA with India

The Ceylon National Chamber of Industries (CNCI) yesterday expressed its concerns regarding the proposed ETCA Agreement to be signed with India later this year. 

CNCI Chairman Tissa Seneviratne stated that the Chamber has expressed its common understanding on this matter and presented paper articles previously. 

“Undoubtedly, we need economic partnerships to develop our economy but these should be carried out in a healthy manner without leading the country into traps. The goals we are planning to achieve should align with the agreements we need to reach that could be shown through studies done by our planning ministry. The ministries should study and explain to public, the share expected out of this kind of agreement. 



It is noteworthy that there is early harvest period proposed for harmonising Free Trade Agreement with India by accelerated arrangement which we believe is important for getting expected results out of this agreement,” he said.

In the CNCI’s statement Seneviratne also said the following.  

As we know, there are doubts on the fate of local manufacturers in the face of a possible increased inflow of Indian products into the Sri Lankan market; obviously that gives rise to a number of issues in addition to its direct hit to the local manufacturers, 90% of whom are SMEs who contribute to the employment of an average 26%.   CNCI is of the opinion that rectifying the Non-Tariff Barriers and other issues pertaining to the existing FTA with India means more to us. It will bring the understanding of both countries specially government officials thinking pattern to an equal sequence. The ISFTA is a good indicator to understand the success rate of agreements with India and their benefits to Sri Lanka.

The CNCI believes that the Sri Lanka’s Positive List of ISFTA that consists of more than 4000 items should be reviewed and should include only the right items which could be offered by the Sri Lankan businessmen to India. We understand that Sri Lanka exports to India only around 4% of the items that are included in the positive list consisting more than 4000 items.  One of the classic examples to explain this is that while Sri Lanka is the largest manufacturer of solid tyres in the world with 25% market share. However still this product is in the negative list of ISFTA. We have a number of manufactures for solid tyres and their value addition is more than 70%, however, to one’s surprise, the pneumatic tyres from Sri Lanka which has only one manufacturer (an Indian company) is in the positive list under the existing FTA. This shows how biased the thinking of regulators is but, unfortunately it has taken nearly 20 years to come to an understanding that such inequalities exist.  Under these circumstances, Sri Lanka should not rush but could work on an eradication of obvious ill treatments and regularise activities in the FTA between our countries.

It is also pertinent to mention that Sri Lanka does not have any comprehensive regulatory mechanism with regard to the areas of Trade, Investments and Services. Our planners and senior officers in ministries have to focus on reviewing the regulatory laws if we need to benefit through similar agreements. Therefore, focusing on the local laws and strengthening those before signing any economic partnership or co-operation agreements with any country, is an important aspect of such agendas. The lethargy that prevails in some government sectors and the shifting of responsibility to others in crucial events shows that agreements similar to ETCA will also go towards one direction leaving the interest of Sri Lankans.

We understand that the Sri Lankan Services sector will be opened to India only in the areas of IT/BPO services, and Ship building / Ship repair services, and no provision seems be included for the free movement of natural persons particularly professionals.  However, the people have expressed their fear that the proposed agreement will not be able to prevent unqualified so called Indian specialists taking job offers in Sri Lanka as there is no proper mechanism to evaluate the qualifications of the professionals.

Even without ETCA, there are so many Indians who work and do businesses in Sri Lanka.  CNCI was also concerned that the present Ambulance Service which has been given to Indians was not published according to the tender procedures before offering it to them. On the principles of good governance, our hopes are that the present government will act fairly focused on development. Had the government published this, there are entrepreneurs who could accept this assignment similar to the present radio taxi service in the country. The Government should have encouraged by offering a five year tax holiday or arranging duty free status or reduction of import duty for the ambulances since this is helping the health services.

There are further doubts in the minds of industrialists in particular and the public in general that  the reason that the government is hastily getting ready to sign this agreement may be due to the pressure they face from India.  We also noticed the government’s failure to communicate on this agreement properly earlier through the relevant ministries with the interested and concerned parties, to show that there is a long term vision in this exercise and to inform the public on expected economic benefits.  Similarly, the Government has not published any detailed document for the public to understand this agreement and its benefit and areas they plan to improve in the agreement for the benefit of Sri Lanka. These acts eventually arouse the curiosity among the people in business community and various other professionals.  However, based on past experience, the available information and looking at the barriers placed in trade relations, the Ceylon National Chamber of Industries is of the view that the proposed ETCA will have a hard time in succeeding its initial phase or early harvest period to bring expected benefits to the Sri Lankan Industry.   However, we are eagerly awaiting and on the lookout for planned moves by the government to strengthen our economy and to stabilise it for the benefit of our future.