May 25, 2010 (LBO) – Sri Lankan exports to India will soon face only a single unified tax in place of a multitude of state taxes which exporters have complained act as barriers to trade, according to remarks by an Indian diplomat. “Let me state first of all that we are not a perfect country. We would like to be, but that is work in progress. Meanwhile, we are making genuine efforts to improve.” “A proposal for a Goods and Services Tax is in advanced stages of consideration by the government,” said Vikram Misri, Indian deputy high commissioner in Colombo.
“When implemented, (it) will lead to one tax for the entire country replacing the multitude of state taxes.”
Sri Lankan exporters to India have repeatedly complained that India’s state taxes raise the cost of selling products there, despite tariffs being removed under the Indo-Lanka Free Trade Agreement (FTA).
Misri acknowledged at a seminar on the FTA organised by the Institute of Policy Studies, a think tank, that the Indian state taxes had created misgivings among Sri Lankan exporters.
“There is also a perception that India creates new obstacles in the way of free trade such as state taxes, quotas on various items and non-trade restrictions such as on port en