Sri Lanka exports to India surge after free trade agreement

May 16, 2013 (LBO) – Sri Lanka’s exports to India have surged under a free trade deal, growing six fold, with the number of items going up four fold to 2,100 but most of the imports to the island take place outside the agreement, economists said. “On average 70 percent of Sri Lanka’s exports to India are under the free trade agreement, compared to only 30 percent Indian exports coming to Sri Lanka under the FTA,” Saman Kelegama, head of Sri Lanka’s Institute of Policy Studies told a business forum in Colombo.

“Sri Lanka’s exports to India have increased from one percent of overall export before the FTA to nearly 6 percent.”

To favour Sri Lankan producers (against the interests of the consumers), the agreement was signed on the basis of asymmetric benefits.

The so-called ‘negative list’ where Indian producers were able to block poorer Indians from buying Sri Lankan products was only 431, while Sri Lankan producers were able to block poorer consumers from buying 1,220 Indian products, through high tariffs.

The Sri Lankan state was also allowed to charge prohibitive taxes from citizens on items like motor vehicles by keeping them outside the FTA.

“When bilateral free trade agreement was signed in 1998, the asymmetry between