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South Asia has a role to play in Asia’s growth prospects
Time running out for Sri Lanka as India on trade liberalisation path

Asia is leading the world economy out of the financial crisis and poised to take the lead in global economic stability and Ashok K. Kantha, High Commissioner of India in Sri Lanka believes South Asia plays a vital role in this process.

He said intraregional trade can help boost the economies of each of the South Asian countries and help the region keep pace with Asia’s economic growth.

"Sri Lanka is the number one trading partner for India in the South Asian region while India is the third biggest trading partner for Sri Lanka. India is also the most balanced trading partner for Sri Lanka with a lower Export-Import ratio," Kantha said.

He pointed out that the top five trading partners of Sri Lanka are predominantly skewed towards either exports or imports and therefore high trade imbalances.

"Without a Free Trade Agreement (FTA) the trade ratio between the two countries would have been 1:40, with the export of Sri Lankan goods to India amounting to US$ 50 million and Indian imports amounting to US$ 2 billion coming into Sri Lanka."

Total exports to India in 2009 amounted to US$ 326 million, while imports from India amounted to US$ 1,697 million.

The FTA between both countries has boosted Sri Lankan trade to India since 2000, he said, as a result the trade turnover between the two countries grew six times to US$ 3.3 billion.

"The FTA was signed with the understanding that regional integration was low in South Asia, only five percent of the total trade generated in the region was between SAARC countries. It was also understood that the only way to archive progress in the region was to share in the regions prosperity.

"The FTA has shown progress. Sri Lankan export volumes have grown ten fold, which is five fold for India," Kantha said.

Sri Lankan exports to India rose from US$ 49 million to US$ 419 million in 2008.

Sri Lanka has granted duty free concessions to 3,932 goods imported from India, while India has opened up 4,150 tariff lines.

Sri Lanka has a negative list of 1180 while India’s list contains 429 products and services, he said.

Kantha said the FTA had its ups and downs but both countries were committed to resolving any issues.

Sri Lanka was to sign a Comprehensive Economic Partnership Agreement with India in 2008 but it never happened as Sri Lanka backed down at the last minute.

"Sri Lanka has to decide. The time is short as India is liberalising its trading rules and any delays on Sri Lanka’s part may only complicate matters further," Kantha.

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