The Hindu Business Line : Lanka urged to diversify export basket to India

“We have been having many discussions in good faith and in a cordial atmosphere to minimise the areas of contention and dispute.” – Mr Jairam Ramesh

Mr Jairam Ramesh

Our Bureau

Kolkata, Feb. 11 The FTA with India offers significant market openings for Sri Lanka and that should be tapped immediately, perhaps through the help of Indian investments if need be.

Making this observation at the India-Sri Lanka investment meet in Colombo today, Mr Jairam Ramesh, Union Minister of State for Commerce, however, hastened to add that “this is not to deny India’s own responsibility for facilitating greater imports from Sri Lanka, but simply to underscore the need to diversify the basket of Sri Lankan exports to India with its dominance on non-ferrous metals and vanaspati”.

(In 2000, Sri Lanka’s imports from India were about 10 times of its exports to India, but in 2007, the island nation’s imports from India has dropped to around 5 times its exports, signifying the positive impact of the India-Lanka FTA.)

Seeing the industry-distribution and geographical spread of Sri Lanka’s exports to India, “I get the feeling that Sri Lanka has really not taken full advantage of the Indian market”. According to the Minister, most of the 4,150 tariff lines with zero duty (as per the FTA) remain unutilised.

Citing the impact of the FTA on investment flows and the effect it has had in somewhat correcting the merchandise trade imbalance between the two countries, Mr Ramesh said a key reason for greater Lankan exports to India in the last seven years was the Indian investments in Sri Lanka in areas like copper, vanaspati, food products and marble industries.

Admitting that the FTA process has not been smooth sailing all through, he said India was perturbed about the ‘spike in imports’ of especially pepper and vanaspati. An export quota has since been negotiated which caps the exports of pepper from Sri Lanka to India at 2,500 tonnes annually and of vanaspati at 250,000 tonnes per year.

“I am aware that Sri Lankan exporters feel that these restrictions are unfair and go against the very spirit of a FTA. Purely from an economic point of view, I cannot disagree with these feelings but ultimately trade is not just about economics but also of politics – and of local politics in a democracy like ours.”

‘Good faith’

Conceding that irritants and grievances remain on both sides, the Minister said “we have been having many discussions in good faith and in a cordial atmosphere to minimize the areas of contention and dispute”. Pointing out that progress was being made, he emphasised that these areas of contention and dispute have not brought the FTA itself into any disrepute.

“There have been very significant gains even as some pains have also become evident. The answer lies in not repudiating the FTA but in working to manage these pains.”

Citing the example of pepper, Mr Ramesh told the gathering of Sri Lankan industrialists “I have been repeatedly telling my own colleagues in Kerala that our problems lie not in imports but in our inability to replant and rejuvenate on time and keep productivity at world levels”.

CEPA likely by end-April

On the rounds of discussions between India and Sri Lanka, since February 2005, for converting the FTA into a Comprehensive Economic Partnership Agreement (CEPA), Mr Ramesh said that as per his own reading of the situation, an agreement acceptable to both sides was likely by end April 2008.

He suggested to the Sri Lankan side that it should set deadlines it considered realistic.

“Then, let us work together to meet those deadlines. If there are specific areas where you want India to be more flexible and accommodating, I am more than prepared to listen.”

He said “actually, we have not insisted on reciprocity at all. The India schedule of commitments in services, for instance, covers far more than what Sri Lanka is offering to India and we are also opening tourism, IT, Shipping and Logistics, which are of great interest to Sri Lanka”.

More Stories on : Foreign Trade | Exports & Imports

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page