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Published
by the Press, Information & Culture Wing, Embassy of India |
In this Issue Opinion
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India and Sri Lanka sign a Free Trade Agreement
FREE TRADE AGREEMENT TO ACCELERATE DEVELOPMENT OF NATIONAL ECONOMIES THROUGH ECONOMIC INTEGRATION Establishment of free trade arrangements between India and Sri Lanka will accelerate the development of national economies, promote mutually beneficial bilateral trade and strengthen intra-regional economic cooperation. Both sides have recognized that the expansion of their domestic markets through economic integration is a vital pre-requisite for accelerating their processes of economic development and have further recognized that comprehensive reductions and elimination of obstacles to bilateral trade through a bilateral free trade agreement would also contribute to the expansion of world trade. The following are the salient features of Free Trade Agreement between India and Sri Lanka signed in New Delhi on 28th December, 1998.Elimination of Tariffs: By India Zero duty on around 1000 items upon entering into force of the Agreement – the list is to be finalized within 60 days of signing of the Agreement. 50% margin of preference upon coming into force of the Agreement on all items, except for those in the Negative List. Tariffs to be brought down to zero over a period of three years. Concessions on textile items restricted to 25%. Four chapters under the textiles sector retained in the Negative List (chapter 50, 57, 61 and 62). By Sri Lanka Zero duty on around 900 items on coming into force of the Agreement. 50% margin of preference for around 600 items upon coming into force of the Agreement. The preference to be deepened to 100% within three years. For the remaining items, except for those in the Negative List, preferences to be deepened to 100% within eight years. Negative Lists: India has retained less than 400 items in its Negative List. These mainly include garments, petro-chemicals, alcoholic spirits and coconuts and coconut oil. Sri Lanka is yet to provide its Negative List. We have asked them to limit this to 20% of the total tariff lines. Items in the Negative List shall not be subject to tariff concessions. Rules of Origin: Domestic value-addition requirements have been kept at 35%. If the raw-material/inputs are sourced from each other’s country, this is reduced to 25% within the overall limit of 35%. The criterion of ‘substantial transformation’ has been provided in the Rules. The goods must undergo transformation at four digit level. The following issues are to be finalized within 60 days from signing of the Agreement. |
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