ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Indo-Sri Lanka Free Trade

The so-called 'free trade' agreement between India and Sri Lanka may fail to achieve its aims as have earlier arrangements between the two countries because policy-making in neither country involves the main stakeholders. The agreement is less than free and includes some elements of irrational protectionism.

Since independence India and Sri Lanka have concluded three major treaties. They are the Srima-Shastri Pact (1964) (to resolve the citizenship question of the hill country Tamils who were brought from India to work in the plantations by the British); the Indo-Sri Lanka Peace Accord (1987) (to resolve the ethnic conflict in the northern and eastern provinces of Sri Lanka); and the Indo-Sri Lanka Free Trade Agreement (1998). The former two were political treaties and the latter an economic treaty. The Indo-Sri Lanka Free Trade Agreement (ISLFTA or FTA) was signed on December 28, 1998 and was supposed to have come into effect on March 1, 1999. Alas, it came into operation only on March 1, 2000, typifying an ingrained characteristic of south Asia. Yet, at the operational level it has not come into force in Sri Lanka by mid-March (I have no idea about the Indian side), because according to the customs they have not received the necessary authorisation/instruction. However, the customs is allowing the importers to clear their goods against a bank guarantee.

The FTA consists of the Agreement and six Annexures – list of items entitled to 25 per cent duty concessions by India [Annexure-A, para 1(b)], negative list of items of India (Annexure D-I), negative list of items of Sri Lanka (Annexe D-II), list of items entitled to 100 per cent duty concession by India (Annexure-E), list of items entitled to 100 per cent duty concessions by Sri Lanka (Annexure F-I), and list of items entitled to 50 per cent duty concessions by Sri Lanka (Annexure F-II). The items which are not included in Annexure-A, para 1(b), Annexure D-I, or Annexure-E of India are entitled to 50 per cent duty concession, though this list is not published.

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