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Indo-Lanka Free Trade Agreement

The document summarizes the Indo-Lanka Free Trade Agreement (ILFTA) signed in 1998 between India and Sri Lanka. It led to preferential treatment on over 5,000 tariff lines and the gradual elimination of tariffs over 8 years. Services trade also increased significantly post-FTA. The agreement helped attenuate the effects of global crises by providing cheap Indian imports to Sri Lanka. Deeper economic integration could further stimulate growth in both countries by tapping into India's large market.

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JayaMadhav
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153 views

Indo-Lanka Free Trade Agreement

The document summarizes the Indo-Lanka Free Trade Agreement (ILFTA) signed in 1998 between India and Sri Lanka. It led to preferential treatment on over 5,000 tariff lines and the gradual elimination of tariffs over 8 years. Services trade also increased significantly post-FTA. The agreement helped attenuate the effects of global crises by providing cheap Indian imports to Sri Lanka. Deeper economic integration could further stimulate growth in both countries by tapping into India's large market.

Uploaded by

JayaMadhav
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Indo-Lanka Free Trade

Agreement:
Introduction
 Economic relations between India and Sri Lanka, which date back to
pre-colonial times, began to pickup in the 1990s with the
liberalization of the Indian economy
 The year 1998 saw the biggest boost in economic relations when
the two countries signed a bilateral Indo-Lanka Free Trade
Agreement (ILFTA), which began implementation in March 2000
 Among other factors, contemporary political forces led to the signing
of the Agreement
 The two countries agreed for preferential treatment on 5112 tariff
lines & an 8-year time table was devised for phasing out tariffs
 Indian state taxes were also to be removed gradually
 Asymmetry between the two countries was accommodated by
special & differential treatment
Services
The extent of commercial services exchange between the two countries
has increased in the post-FTA period as demonstrated by the following
examples:
 Many SL students & patients travel to India to purchase education &
health services each year
 Approximately 70% of Colombo port’s income is from transshipment
earnings from India.
 Approximately 40% of SL airlines’ revenue is from the Indian market
(SL Airlines)
 SL IT firms have provided technical solutions to Indian companies
(interblocks sold internet banking solution to Indian banks,
Microimage sold Tamil SMS adaptation to Bharti Airtel)
 SL tourist sector firms such as Aitken Spence & Jetwing have ventured
into the Indian market
 India has become the largest source of tourists to SL
 Tourist arrivals from India grew rapidly at 20.9% per annum during
2000-2007 & accounted for 19.4% of the market share in 2008
Role Played by the ILFTA in Crisis Situations
 After the global financial & food crises & in the context of the ongoing
economic slowdown, it is important to examine whether the ILFTA has
played any role in attenuating the crisis and recovery effects in the SL
economy
 The main role played by the FTA in the face of the crisis has been in
providing cheap Indian imports to SL consumers, such as oil, vehicles,
watches & pharmaceutical products, when prices are on the rise in other
countries
 The fact that the Indian economy has remained relatively unaffected by
the economic downturn has been an additional advantage
 Geographical proximity has enabled savings on transport-related costs
 It is thus important to look beyond the FTA in order to promote more
cooperation which will enable the two countries to follow more inclusive &
sustainable development policies & provide necessary safeguards against
future crises
Conclusion

 It is important to rectify the shortcomings of the FTA & build on its


achievements
 The key opportunity is to tap into the large and dynamic Indian
market, by moving beyond the ILFTA towards broader economic
integration
 Deep economic integration with a fast-moving economy like India
could contribute to stimulating growth rates in SL
 Today, as an economic crisis grips Sri Lanka’s traditional export
markets and a food price crisis engulfs the global economy, SL should
view India as an opportunity and not a threat, and strive towards
more meaningful cooperation in facilitating inclusive and equitable
development policies
Thank YOU

Presented by:
Sai Avinash Valluri
170541048
BBA-II(A)

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