By: Staff Writer
Colombo (LNW): The Indo-Lanka Free Trade Agreement (FTA) is to be upgraded to an Economic and Technology Co-operation Agreement (ECTA).
President Ranil Wickremesinghe said that ECTA is essential as India is going to be the next growth center and will trigger off growth in South Asia.
“We are just 22 miles away and we have to work especially to ensure that the synergies of Sri Lanka and Tamil Nadu are brought together,” the President said.
The President expressed this view during an interview organized by Harvard University through Zoom technology.
India and Sri Lanka agreed to start discussions on an Economic and Technology Cooperation Agreement (ECTA) and unveiled plans to cooperate on power, digital payments, connectivity and green energy. The ECTA with Sri Lanka will focus on tariff and non-tariff barriers as well as investment rules.
The development came during the visit of Sri Lankan President Ranil Wickremesinghe to New Delhi recently.
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.
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.
