Free trade pact with Lanka made effective Our Bureau NEW DELHI, Feb. 2 INDIA and Sri Lanka have exchanged letters for operationalising the Free Trade Agreement (FTA) that both countries' leaders signed on December 28, 1998, thus breaking the logjam and rendering the agreement effective within March 2000. The FTA exchange of letters was done by the Commerce Secretary, Mr. P.P. Prabhu, and the Finance Secretary of Sri Lanka, Dr. P.B. Jayasundera, here on Wednesday. The agreement provides for duty-free as well as duty preference access for the goods manufactured in the two countries. India agreed to phase out its tariffs on a large number of items within a span of three years, while Sri Lanka would follow suit in eight years. The two sides will maintain negative lists of items on which no duty concessions are given. These lists include items on which protection to local industry is considered necessary. Both sides intend to reduce the items in the negative lists through periodic consultations. Under the FTA, products with a domestic value addition content of 35 per cent would qualify for preferential market access. Sri Lanka's exports with a domestic value addition content of 25 per cent would also qualify for entry to the Indian market if they have a minimum 10 per cent Indian content. India would allow the import of Sri Lankan tea to the extent of15 million kg per annum at a fixed tariff preference of 50 per cent. As regards garments, India would permit import of 8 million pieces per annum at a fixed tariff preference of 50 per cent. Out of this, for six million pieces, fabrics would need to be sourced from India. A ceiling of 1.5 million has been set for individual items. The two sides have also held detailed consultations about the modalities of implementation of the agreement and reached an understanding on all outstanding issues. The FTA between India and Sri Lanka is a landmark in the bilateral relations, the culmination of which would contribute to enhanced trade between the two countries as well as to expanded and diversified co-operation in a range of economic spheres, including investments. Both the countries view the FTA as a crucial milestone in the larger objective of regional economic cooperation and integration.
Copyrights © 2000 The Hindu Business Line & Tribeca Internet Initiatives Inc. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line & Tribeca Internet Initiatives Inc. All rights reserved worldwide.