As India deepens its global trade engagements, most recently through a landmark Free Trade Agreement (FTA) with the United Kingdom, Sri Lanka faces mounting pressure to expedite its own stalled Economic and Technology Cooperation Agreement (ETCA) with its closest neighbour and largest trading partner. The Indo-Lanka Chamber of Commerce and Industry has strongly urged the Sri Lankan government to learn from the UK-India FTA and revive momentum on finalising a bilateral trade pact that could unlock vast economic potential for the crisis-hit island.
The UK–India FTA, signed earlier this year, is expected to boost the UK economy by £4.8 billion annually, while providing improved market access, regulatory cooperation, and investment flows. The Indo-Lanka Chamber says Sri Lanka stands to benefit even more due to its geographic proximity, cultural ties, and existing economic relationship with India.
“This is a powerful example of what can be achieved through a well-structured bilateral agreement,” the Chamber said in a statement. “Sri Lanka is far better positioned geographically than the UK to engage with India. We share centuries of trade, cultural and historical links, and India continues to be our top trading partner.”
India accounted for nearly US$5.4 billion in total bilateral trade with Sri Lanka in 2023, according to Central Bank data, with Sri Lankan exports to India amounting to approximately US$900 million. The Chamber believes these numbers could grow significantly under a modernised framework like ETCA, which would enhance preferential access, draw Indian investment into key sectors, and integrate Sri Lanka more deeply into regional value chains—crucial for the country’s post-crisis recovery.
Despite these opportunities, progress on ETCA has remained stagnant for over seven years. Introduced during the Yahapalana administration in 2016 as an extension to the existing Indo-Sri Lanka Free Trade Agreement (ISFTA), the ETCA proposal faced intense opposition from nationalist groups, trade unions, and several political parties—including elements of the current ruling alliance. Critics feared job losses and alleged that the agreement could allow an influx of Indian professionals into the domestic job market, although these claims were largely unsubstantiated by official drafts.
Now, with Sri Lanka facing a narrow path to recovery following the 2022 economic collapse, businesses argue that economic pragmatism must override political posturing. The Indo-Lanka Chamber emphasized that India’s rise as a global economic power makes it an indispensable partner, and Sri Lanka must act before it is further sidelined in South Asia’s evolving trade dynamics.
“India is not just a strategic partner—it is our immediate neighbour and a growing economic powerhouse,” the Chamber said. “As countries like the UK reap tangible benefits from FTAs with India, Sri Lanka must not hesitate. A revived ETCA could deliver jobs, boost investor confidence, and reposition Sri Lanka as a regional trade hub.”
With nations aggressively pursuing bilateral and multilateral trade deals worldwide, Sri Lanka’s next move could determine whether it remains a passive observer—or an active participant—in the regional economic resurgence.
