The free trade agreement between India and Sri Lanka has quadrupled trade to 2.7 billion dollars between the two countries during 2000-08, PTI reported yesterday (May 11).

The trade pact was fully implemented in March 2008. While the implementation period for India was 2000-2003, it was 2000-2008 for Sri Lanka. Bilateral trade stood at 685 million dollars in 2000-01.

Prior to the FTA, trade between India and Sri Lanka grew by 10 per cent per annum during 1993-99.

Apart from trade, investment flows grew significantly as a result of the FTA, which facilitated duty free trade for businessmen from both sides. Indian FDI in Sri Lanka was mere 62 million dollars during 1996-2002. This grew significantly to 450 million dollars by 2004, FICCI said.

India has taken a lead over Japan in the post-FTA period in terms of share in Sri Lanka's global imports. Its share increased from 9.5 per cent in 1999 to over 17.3 per cent in 2005. Sri Lanka also improved its standing in India's global imports and ranked at 34 in 2006-07.

The trade composition also underwent significant changes with the FTA coming into effect. "In 2006-07, mineral fuel and iron and steel replaced vegetables and machinery in the top 5 export items to Lanka. Mineral fuels constituted 30 per cent of India's exports post-FTA, reaching 702 million dollars in 2006-07," it said.

Imports also witnessed a change in composition with vegetable, animal fats and oils replacing tea and coffee to become the main items of imports from Sri Lanka, it added.