FB   
 
Powered bysps
        Society for Policy Studies
 
 

 
Bilateral trade and economic diplomacy: The future of Indo-Sri Lanka economic initiatives
Posted:Jan 7, 2018
 
Print
Share
  
increase Font size decrease Font size
 
By Srimal Fernando
 
The emergence of Indian foreign policies (IFPs) such as the Neighbourhood First policy, has provided a pathway to promote economic integration among the member states of the South Asian Association for Regional Cooperation (SAARC).
 
For this reason, Sri Lanka’s geostrategic position comprising a very important maritime gateway for international trade between East-West remains an important foreign policy priority yet to be explored by India and Sri Lanka.
 
Indeed, the deep, strong and reciprocal economic ties between the two nations will be beneficial to each other. In this context Sri Lanka would get access to a vast domestic market of more than 1.2 billion people in India.
 
India is one of the biggest trading partners of Sri Lanka, with bilateral trade amounting to $ 4.38 billion in 2016 (High Commission of India in Sri Lanka). Over the years economic relations between the two nations have grown in both in depth and dimension, especially with the signing of the Indo-Sri Lanka Free Trade Agreement (ISFTA) in the late ’90s which came into force in March 2000, considered as an important step to promote bilateral trade.
 
In recent times Sri Lanka imports $ 3.83 billion worth of goods from India and exports $ 551 million to the neighbouring country (High Commission of India in Sri Lanka). Therefore a distinctive feature of balance of trade between the two nations has tilted in favour of India.
 
In this setting the export figures do not reflect the complete picture of economic ties between the two countries. Until now for Sri Lanka on average, 70% of its export products to India gain duty-free status, while Indian exports amount to an average estimate of 25% under the Indo-Sri Lanka Free Trade Agreement (ISFTA). In addition, the facilitation of South Asia Free Trade Agreement (SAFTA) is beneficial for both nations to promote trade, which in turn also boosts economic diplomacy.
 
More than 350,000 Indian tourists visit Sri Lanka every year and about 126 SriLankan Airlines flights operate to 14 Indian cities per week. Sri Lankan pilgrims mostly go to Bodh Gaya, Sarnath and Kushinagar Buddhist pilgrimage sites. As a result of bilateral relation development, exchanges between both nations have simplified faster visa application procedures by issuing tourist visa on arrival or by applying online prior to arrival provided that the travellers have a valid return air ticket.
 
The flow of Indian aid has increased sharply for Sri Lanka during the past two decades. For example, India has committed around $ 2.63 billion as development credit and $ 458 million was in the form of grants (High Commission of India in Sri Lanka). Over the past eight years the Indian Government responded to various challenges of post-war reconstruction needs in the Northern Province of Sri Lanka.
 
In recent times India pledged to provide a credit line of $ 800 million for the reconstruction of a 252.5 km crippled railway line in the Northern Province of Sri Lanka. After more than 25 years, the crippled railway line was reconstructed by India Railway Construction International Ltd. (IRCON) with the assistance given by India. In addition under a new funding India committed over Indian Rs. 1,370 crores to construct around 45,500 new houses in Sri Lanka.
 
Sri Lanka has grown to be among the important partners of India. Notably, one of Sri Lanka’s biggest trading partners is India. The avenues for economic cooperation between the two close nations India and Sri Lanka are many and diverse, some of them appear to be sensitive in the current environment of politics and economic diplomacy. Hopefully, Sri Lanka will become increasingly important to India’s Neighbourhood First foreign policy in the near future.
 
 
 
 
 
Print
Share
  
increase Font size decrease Font size
 

Disclaimer: South Asia Monitor does not accept responsibility for the views or ideology expressed in any article, signed or unsigned, which appears on its site. What it does accept is responsibility for giving it a chance to appear and enter the public discourse.
Comments (Total Comments 0) Post Comments Post Comment
Review
 
 
 
 
spotlight image Thailand will be the coordinating country for India within ASEAN from July. In an exclusive interview with INDIA REVIEW & ANALYSIS, the fortnightly journal of the Society for Policy Studies (SPS),  Thailand’s Ambassador to India, Chutintorn Gongsakdi, gave a comprehensive view of bilateral relations and
 
read-more
The struggle for autonomy has been going on within the Indian Institutes of Management (IIMs) from their inception, writes P.D. Rai
 
read-more
As India and the 10-nation ASEAN bloc culminate the commemoration of 25 years of their dialogue partnership with a summit in New Delhi January 25 that all the leaders will attend, India is laying out the crimson carpet to ensure that the first ever Republic Day celebrations at which 10 ASEAN leaders will be Chief Guests, jointly, is a
 
read-more
Afghanistan's leaders have asked the Security Council to mobilise international pressure on Pakistan to stop supporting terrorists, United States Permanent Representative said on Wednesday. Speaking to reporters here after the Council's weekend visit to Afghanistan and meetings with the nation's leaders, Haley said, &l
 
read-more
As the Myanmar government’s violent policy towards its Rohingya Muslims drew increasing international condemnation in 2016, the country’s sometime icon of democracy, Aung San Suu Kyi, declined to speak out for the persecuted minority.
 
read-more
“We have a very solid commitment to climate action,” he said. “We cannot be defeated by climate change and we are not yet winning this battle” and the biggest victims of climate change are the developing countries that are members of the Group of 77 (G77).
 
read-more
In a bid to promote trilateral innovation and business opportunities between the US, India, and Israel, Israel-India Technology Group has launched a trilateral fund of $50 million. "We ar...
 
read-more
Column-image

The Tehreek-e-Taliban Pakistan (TTP) has for the first time claimed responsibility for the assassination of former Pakistani Prime Minister Benazir Bhutto in a new book in written by Taliban leader Abu Mansoor Asim Mufti Noor Wali.

 
Column-image

Title: Salafi-Jihadism -The History of an Idea; Author: Shiraz Maher; Publisher: Penguin Random House UK: Pages: 292; Price: Rs 499

 
Column-image

A Review of Anatomy of Failure by Harlan K. Ullman (Naval Institute Press, 242 pages)

 
Column-image

Title: The Beckoning Isle; Author: Abhay Narayan Sapru; Publisher: Wisdom Tree; Pages: 157; Price: Rs 245

 
Column-image

Title: India Now And In Transition; Editor: Atul Thakur ; Publisher: Niyogi Books: Pages: 448; Price: Rs 599