The Hindu Business Line : Indo-Lanka trade testimony for successful FTAs

THE increase in trade between India and Sri Lanka is a sure indicator to both Bangladesh and Pakistan that free trade agreements (FTAs) with smaller economies will be beneficial, according to the Indian High Commissioner in Sri Lanka, Mr Nirupam Sen.

He told visiting presspersons from India that trade between India and Sri Lanka in the current financial year was $1.3 billion and had recorded its highest since the FTA was signed between the two countries. The adverse trade balance, which stood at 15:1 last year, had come down to 4.5:1 this year.

Besides trade, India has been strengthening its presence in Sri Lanka in the fields of medicine, information technology, petroleum and power. Mr Sen said Apollo Hospitals has been set up here and now the Indian Government has given a grant of $7.5 billion for a cancer centre in Colombo. The second hospital project funded by the Indian Government is at Dickoya near Kandy, with an investment of Rs 20 crore

In addition to this, some Indian public sector undertakings such as RITES (Rail India Technical and Economic Services Ltd), National Thermal Power Corporation and Bharat Heavy Electricals Ltd have set up projects. Indian Oil Corporation (IOC) had recently paid the final amount of $45 million for a $75-million deal with the Sri Lankan Government to retail fuel in the island country. Lanka IOC Pvt. Ltd, a wholly owned subsidiary of IOC, has taken over a large number of petrol bunks.

India is also extending a $100-million credit line for goods and services over a period of 20 years with a moratorium of five years. This includes a wheat loan of $31 million. The last tranche of $25 million had been handed over recently to the Sri Lankan Government

Lanka IOC can now import fuel, own bunks and share the state-owned Ceylon Petroleum Corporation's storage and pipeline facilities. It has started using three of the oil farms, including the one at Trincomallee.

On the reverse flow, a few Sri Lankan companies, mainly in the confectionary business, would soon be setting up shops in Chennai, Mr Sen said.