Sri Lanka and India have agreed to further strengthen the bilateral trade, investment and economic ties between the two countries at the conclusion of an official visit by S.R. Rao, Commerce Secretary, 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, says the Ministry of Finance & Planning.
The 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, 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. This trend is not viable. 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 utilization of the opportunities available between the two economies, the Ministry further said.
At these discussions both sides agreed to undertake a timely revision of the following elements in order to reflect the current bilateral economic scenario.
• Review the respective negative Lists
• Addressing the removal of non-tariff barriers
• Establishing a mechanism for resolving trade disputes
• Expansion of bilateral trade to US$ 10billion over a period of 3 years, with due recognition to increasing exports from Sri Lanka.
The Indians offered 8 million pieces of apparel to enter the Indian market without restrictions with immediate effect. The Sri Lanka side emphasized 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 in to the Indian market will help to move ahead progressively towards higher export growth and investments.
The validity period of the licence for processed meat had been extended from six months to one year. The quarantine restrictions on Rambutan and Mangosteen had 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 totaling 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 Puttlam, 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 emphasized 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.
Sri Lankan side emphasized 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.