Sri Lanka seeks unrestricted market access from India

Wednesday, 26 June 2013 00:35 - - {{hitsCtrl.values.hits}}

Official discussions between the Governments of Sri Lanka and India on Trade, Investment and Economic Cooperation were held on 24-25 June in Colombo, co-chaired by Dr. P.B. Jayasundera, Secretary of Finance and Planning of the Government of Sri Lanka and Sri S.R. Rao, Secretary of Commerce of the Government of India. At these discussions both sides agreed to build on the existing economic relationship to achieve the shared goals of poverty alleviation, employment creation and economic development for the people of the two countries. Bilateral trade turnover between the two countries had crossed the US$ 5 billion mark in 2011-12. India was Sri Lanka’s leading trade partner of Sri Lanka globally, while India’s largest trade partner in South Asia is Sri Lanka. However, the trade turnover is not equally distributed and Sri Lanka has continued to experience higher trade deficit with India.

Since this trend is not viable and there is a need to take steps to increase exports from Sri Lanka to India, it was agreed that there was considerable potential to expand bilateral trade, in a balanced manner, through optimal utilisation of the opportunities available between the two economies. At these discussions both sides agreed to undertake a timely revision of several elements in order to reflect the current bilateral economic scenario. They include: Reviewing the respective negative lists; addressing the removal of non-tariff barriers; establishing a mechanism for resolving trade disputes; and expansion of bilateral trade to US$ 10 billion over a period of three years, with due recognition to increasing exports from Sri Lanka. The Indians offered eight million pieces of apparel to enter the Indian market without restrictions with immediate effect. The Sri Lankan side emphasised the importance of addressing the growing trade deficit with India and requested market access by removing prevailing quantity restrictions in the apparel, tea and pepper. The facilitation of entry of value-added products including apparel, high-end tea, value-added rubber products, floriculture and spices into the Indian market will help to move ahead progressively towards higher export growth and investments. The validity period of the licence for processed meat has been extended from six months to one year. The quarantine restrictions on rambutan and mangosteen have also been dispensed with. These positive measures will help in improving bilateral trade. It was noted that there was a need to resume ferry services between Colombo and Tuticorin and also Talaimannar and Rameswaram. India has recently emerged as a pre-eminent development partner in Sri Lanka’s public investment strategy through grant assistance and loans totalling US$ 1.75 billion. This includes the construction of 50,000 housing units in the Northern, Eastern, Central and Uva Provinces for low income families, restoration of rural vocational training centres in Puttalam, the establishment of a 150-bed district hospital in Hatton, the development of vocational training centres in selected districts, the rehabilitation of the Kankesanthurai Port and humanitarian assistance in support of the post conflict rehabilitation initiatives of the Government of Sri Lanka. The leader of the Indian delegation emphasised the need for targeted Indian investment with a view to assisting Sri Lanka widen its export base and enable integration into regional supply chains including in the automobile parts and light engineering and pharmaceutical sector. The Sri Lankan side emphasised the importance of bringing in more investments in the form of joint venture projects to encourage Sri Lankan private sector and State enterprises to work together in several areas in which Sri Lanka currently relies in imports using the model adopted in the case of the sugar refinery in Hambantota which will replace imports as well as expand exports.