Indian and Sri Lankan authorities are now working towards the finalisation expeditiously of the much delayed and widely debated Economic and Technology Co-operation Agreement (ETCA), which will out strip the existing free trade agreement (FTA) entered in to in March 2000, Trade Ministry sources confirmed.
The conclusion of ETCA negotiations has been delayed for five and half year period since 2016, as it was opposed by professional bodies, particularly in the IT and healthcare sectors who alleged that it would give preference to Indian workers displacing skilled Sri Lankans.
It was initially scheduled to be signed in 2016 when President Ranil Wickremesinghe was the prime minister at that, time; senior trade ministry official said adding that it is expected to address larger issues of market access and asymmetry in two-way trade.
According to the Commerce Department of the Trade Ministry, there has been no progress in negotiations between India and Sri Lanka with regard to the controversial ETCA since the last round of bilateral talks in October 2018.
Preliminary discussions on the ETCA were held in 2015 during the Fourth Commerce Secretary-level talks between the Indian and Sri Lankan sides in New Delhi where this agreement was proposed.
The high ranking official of the Commerce Department noted that 11 rounds of bilateral negotiations were conducted, with the first round held in August 2016 and the last and 11th round in October 2018.
The 12th round of negotiations which were scheduled to be held in September 2019 was postponed pending cabinet approval.
This was due to a new regulation introduced by the then Ministry of Development Strategies and International Trade (MoDSIT), which had made Cabinet approval compulsory to conduct negotiations for any trade agreement, he explained.
The importation of good from India to Sri Lanka was at a very low level under the free trade agreement during the past few years due to heavy taxes on Indian imports which was not covered under the FTA.
Further Indian imports were subjected to other levies and duties in addition to customs duties such as the cess levy and the Ports and Airports Development Levy (PAL), he pointed out.
However, the growth of exports to India from Sri Lanka has been sluggish due to the non-tariff barriers imposed by the Indian authorities, which include un necessary regulatory requirements, he added.
The ETCA initiative follows unfruitful negotiations on a Comprehensive Economic Partnership Agreement (CEPA) between the two countries.
The India-Sri Lanka Free Trade Agreement of 1998 was followed by efforts towards CEPA to liberalise trade in services and investment starting in the mid-2000s.
However, the CEPA negotiations dragged on for nearly a decade in the face of wide spread opposition particularly by the business community and finally the then government had to abandon the negotiations under pressure.
