The Hindu Business Line : Sri Lanka urges India to address issues affecting bilateral trade

THE Sri Lankan Commerce Minister, Mr Jeyraj Fernandopulle, urged the Indian Government to address, on a priority basis, issues that affect trade between India and Sri Lanka.

Addressing a conference on enlargement of Indo-Sri Lanka free trade agreement here on Friday, he said Sri Lanka was fully committed to the Free Trade Agreement (FTA) and the proposed Comprehensive Economic Partnership Agreement (CEPA) that aims to bring the two economies closer.

But there are concerns on the implementation of the FTA.

For instance, exporters in Sri Lanka have complained of difficulties especially in exporting to Tamil Nadu due to entry tax and sales tax issues, he said.

Policymakers should take the cooperation of all the stakeholders. "Without their active involvement CEPA will remain an empty shell." Investor confidence in a stable business and policy environment has to be shored up, he said.

Though India has allocated a quota for Sri Lanka's tea and garment exports only less than five per cent has been utilised because of various reasons. Such concerns should not become major issues, he said.

Mr Fernandopulle urged Indian investors to widen their investment base in Sri Lanka. It was now based on just a few products such as copper and vanaspati.

Indian investors should take advantage of Europe's trade package to Sri Lanka, which gives it `GSP plus' status meaning it can access European markets at low duty rates. India and Sri Lanka can together look beyond the two markets to grow, he said.

Mr Macky Hashim, President, SAARC Chamber, said India and Sri Lanka, which have had close geographic and cultural ties, should be able to exploit the trade opportunities better. It was up to the businessmen to relentlessly take up the issues and constraints with the respective governments and policymakers, he said.

The Indian High Commissioner to Sri Lanka, Ms Nirupama Rao, said in the last five years since implementation of the FTA, bilateral trade had trebled. It crossed a billion dollars in 2002 and two billion in 2005. CEPA provides a further route for progress and growth.

Some of the areas of concern for India are the pending subsidy of Lanka IOC, the Indian Oil Corporation's joint venture, which amounts to about $74 million.

Another issue is the quality of investments from India to Sri Lanka, have been well below expectations. Quality investments are expected to generate local employment, improve human resource pool and assist infrastructure development. But investments in the field of copper, vanaspati and bakery shortening have not achieved this and affected the local Indian industry. These have to be suitably addressed, she said.

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