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Reciprocity vital for the success of Indo Sri Lankan Free Trade Agreement says former Sri Lankan central bank Governor Indrajit Commaraswamy

There should be reciprocity between India and Sri Lanka in their approach and at the same time understanding the need for differential treatment for the free trade agreement to be successful, former Sri Lankan Central Governor Indrajit Commaraswamy said while addressing a webinar last week according to sri lankan media reports

Sri Lankan policymakers to take advantage of the size of the Indian market

The positive list, the negative list, and the transition periods for liberalisation in the agreement showed that India understood this principle. He called on Sri Lankan policymakers to take advantage of the size of the Indian market while speaking at a joint Takshashila Institution and Pathfinder Foundation webinar on October 9.

Sri Lanka is like an unsinkable aircraft carrier parked 20 miles off the coast of India. You can see India’s neighbourhood policy gain traction on the ground. It is in India’s strategic interests to have stability on its southern border given the sensitivities in the Northern border and that a lot of the strategic assets are in the South.

Sri Lanka has a trade deficit of 3.1 billion US Dollars in favour of India

Sri Lanka has a trade deficit of 3.1 billion US Dollars in favour of India. However only 5 per cent of India’s Exports to Sri Lanka only comes on a concessional basis due to the Free Trade Agreement. Sri Lankan exports to India under the FTA accounted for 490 million US dollars while total exports of India accounted for 763 million US Dollars. .

Coomaraswamy said if ‘make in India’ succeeds then it will be an opportunity for Sri Lankan firms to plug into these supply chains. India and Maldives have increased relations following the recent election in the Maldives. Grid connectivity between the two countries is a possibility.

At the 2015 to 2019 period, India 3rd most significant source of FDI

He said, “If you look at the 2015 to 2019 period, India was Sri Lanka’s largest trading partner, it was the 3rd most significant source of FDI, and it was the largest source of tourists. India has been a source of concessional assistance and grants.

India was the first country to assist the island nation during the pandemic

The EXIM Bank of India has provided 1.8 billion US dollars mainly for railway development. The grants assistance has gone to the rehabilitation of conflict-affected areas.” A US $15 million grant was recently given following the talks between Prime Minister Modi and Prime Minister Mahinda Rajapaksa. India was the first country to assist the island nation during the pandemic. India provided the major financial support for the all-island ambulance service.

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