Deepening Economic Cooperation Between India And Sri Lanka

This book analyzes the performance and impact of the India–Sri Lanka free trade agreement over the past decade and suggests the way forward. India became an important source of imports for Sri Lanka immediately after the implementation of the free trade agreement. Bilateral trade between the countries increased steadily thereafter, with Sri Lankan commodities finding a large market in India. The composition of trade also changed with an increased number of new goods being traded. The book computes indices and suggests scope for deepening economic cooperation between the two countries by pruning the negative lists for trade in goods, identifying potential investment, and suggesting policies for expanding cooperation in services.

This edited book is an outcome of the proceedings of the International Conference 'India-Sri Lanka Relations: Strengthening SAARC', organized by Centre for Indian Ocean Studies, Osmania University, Hydrabad, India in November 2012. It deals with different aspects of India-Sri Lanka Economic, Social, Political, Ethnic and Cultural relations, dating back to pre-colonial times, to the 1990s with liberalization of Indian economy. In the post 1990 period, consistent efforts have been made by India and Sri Lanka on a Comprehensive Economic Partnership Agreement which would built on the success of the Free Trade Agreement (FTA).

India-Sri Lanka signed free trade agreement (FTA) in 1998. Looking at the success of the agreement both the countries engaged themselves in negotiating a 'Comprehensive Economic Partnership Agreement' (CEPA), which include trade, investment, and technology transfer etc. The CEPA negotiation was initiated in 2005 and concluded in July 2008, after thirteen rounds of negotiations. CEPA comprise of four objectives; widening and deepening of the existing FTA, establishing an agreement on trade in services, including measures for promotion of investment in each other's countries and enhancing economic cooperation. Both sides had decided to sign the CEPA during the 15th SAARC Summit held in Colombo but due to reservations expressed by Government of Sri Lanka, the agreement has still not been signed. Reservations were based on two broad concerns: about the nature of the CEPA itself and that the drawbacks in the FTA should be dealt with first, prior to embarking on a CEPA. It is important to note that CEPA has made attempts to address both the issues. The paper analyses the positive and negative views about the current trade dynamics between these two countries and their possible implication in post CEPA period. The article also analyses various clauses imbibed in the agreement for services and investment issues.

India and Sri Lanka are geographically contiguous and culturally close. The island state of Sri Lanka is barely thirty kilometers away from India's southern coastal tip. People of these two countries share many similarities in terms of dress, food habits, manners, customs and ways of life. In spite India Sharing border with all its neighbouring countries in South Asia, its relationship with Sri Lanka has been relatively more cordial than with other countries in the region. In addition to their cordial relationship, there is minusderstanding and mistrust between the two resulted in many ups and down in their mutual relationship. The issue of Tamils of Indian origin and maritime issues between the two countries created turbulence. The civil war of 1983 further aggravated the situation. Half of India's investment in South Asian region is invested in Sri Lanka and as such the island state has emerged as a close economic partner of India. Both the countries realize that restrictions on trade between the two are detrimental to their economic growth and prosperity. There is a greater potential for enhancing and institutionalizing bilaterl economic cooperation in the exploration and exploitation of sea resources in the Indian Ocean waters. Neither country can ignore the security of the other. Sri Lanka cannot ignore the problems of Tamil Nadu when it talks about its relationship with India. Similarly India cannot ignore the internal problems of Sri Lanka when it seeks to improve its relations with the later. The volume probes into various mechanisms and strategies with a view to shaping better for both the countries. The papers provide a perspective in debating the emerging issues of greater concern to India and Sri Lanka in the dynamic world of the 21st Century. There are eighteen papers, divided into six sectios.

The report was written by senior scholars of international studies and Indian Ocean studies and focuses on international relations in the Indian Ocean region and covers many aspects of OBOR policy and South Asia. The report includes both a strategic review and major events, as well as related data in this region. This book also includes the origin, the aims, frameworks, the regional and global impact of India’s new development under the Modi administration. The book includes the authors from 5 different institutes in China which provide readers with a full and authentic picture of India’s most recent development. This year’s Annual Report is the fourth of this kind and the only one which covers exclusively the Indian Ocean region in China.

The India-Sri Lanka Free Trade Agreement has been in operation for more than a decade. The paper provides the Sri Lankan perspective of the Free Trade Agreement (FTA) highlighting both the positive outcomes and the negative aspects. The paper shows that the FTA has worked in favor of Sri Lanka but its full potential has not yet been realized due to market access problems in India, and the lack of supply capacity for some products in Sri Lanka. The India-Sri Lanka Comprehensive Economic Partnership Agreement addressed many of the negative aspects of the FTA in a broader economic integration framework but was unable come into operation due to public misconceptions and lack of entrepreneurial and political leadership in Sri Lanka.