Lanka has benefited from FTA with India

By Mario Andree

Department of Commerce Director General Gomi Senadheera said the Indo-Sri Lanka Free Trade Agreement (ISFTA) has been positive for Sri Lanka. The country has benefited from the trade agreement more than India.

Addressing a seminar on Trade Agreements organized by the Spice and Allied Products producers and Traders Association he said that the trade balances of the two countries have been significantly negative for Sri Lanka, but it’s not due to the ISFTA, he pointed out.

He said the total trade between the two countries has grown significantly and Indian imports have increased from US$ 500 million in 1995 close to US$ 3 billion by 2009. Sri Lankan exports have improved from a smaller number in 1995 and now come close to US$ 500 million.

However the trade balances of the two countries also have increased significantly with the improvement of trade, and that India has been exporting to Sri Lanka mostly outside of the FTA. The trade inside the FTA has not grown providing Sri Lanka the upper hand.

Sri Lanka has been most benefited from the FTA. He pointed out that most of the Exports have been within the agreement with low levels of outside trade taking place. In this context Sri Lanka has benefited with a positive trade balance and sometimes a slight negative balance, he said.

"The trade balances for total trade has been in favour of India in 2004 amounting to nearly US$ 1billion and as at 2008 it has improved to US$ 2.5 billion. However if the trade in goods solely under the FTA was considered Sri Lanka has enjoyed a positive trade balance or an insignificantly small deficit," Senadheera said.

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