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| Sunday, 11 August 2002 |
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Indo - Lanka FTA to extend to services Sri Lanka's greatest strength lies in the services sector. theColombo Port could grow further with more incentives, and if Trincomalee is added as a deep water port for the future, Indian High Commissioner Gopala Krishna Gandhi said at the 163rd annual general meeting of the Ceylon Chamber of Commerce. Transshipment, banking and financial services, information technology, insurance, travel and tourism, hotels and telecommunications all represent areas of growth for the future. Sixty per cent of India's transshipment trade already takes place through the Colombo Port. The prime mover to make this happen would be the conclusion of an agreement on services as an extension of and complement to trade in goods under the Free Trade Agreement (FTA), said the High Commissioner. By March 2003, 5000 Indian items will become eligible for duty-free imports. Indian tea will be permitted to come to Colombo while India will open two additional ports - Mumbai and Vishakhapatnam - for Sri Lankan tea. The ports of Calcutta and Mumbai will be ports of entry for Sri Lankan garments. India has also increased the quotas in respect of garments using non-Indian fabric, which will come into effect when the present quota is saturated, apart from raising the level from 1.5 million to two million pieces per category per annum. Sri Lanka has responded by showing flexibility on cement by increasing the margin of preference to 35 per cent in respect of bulk cement. None of these steps were easy. He said though the FTA is a good document, exports to India have increased only by 15 per cent within the last three years while India's exports to Sri Lanka have increased only by 18 per cent. "Are tariffs and related structures the reason? Are local provincial levies nullifying the FTA's concessions? If we were, by a magic wand, to remove all tariffs and make this a zero duty zone, would trade grow exponentially?" he asked. He said there would be an increase in trade, but not an exponential increase in trade. The reason for this is the principal items of trade remaining subject to limits of production and absorption. India is an IT giant, a pharmaceutical ace and an iron steel cement behemoth, but its number one export to Sri Lanka is the humble maisoor dhal. Sri Lanka's number one export to India is black pepper while arecanut occupies second place. In the last 10 years, Indian engineering goods such as Bajaj auto rickshaws and Ashok Leyland and Tata buses have started to make an impact. He said that as India liberalises the quality of its manufactured goods and improves to world standards, Sri Lanka will begin to better appreciate the price and serviceability convenience of sourcing increasing quantities of engineering and manufactured goods from India. |
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