NEW DELHI: India and Sri Lanka may sign the long-awaited Economic and Technical Cooperation Agreement (ETCA) in FY25, two people said. ETCA builds on a previous free trade agreement (FTA) that came into effect in 2000 and enhances bilateral trade between neighboring countries. India and Sri Lanka resumed negotiations on ETCA in November 2023 after a hiatus of about five years, as both sides are keen to deepen economic ties between the two countries. The final round was held in January. “Both India and Sri Lanka are motivated to reach an agreement. Negotiations are progressing rapidly,” said one of the people cited, speaking on condition of anonymity.
NEW DELHI: India and Sri Lanka may sign the long-awaited Economic and Technical Cooperation Agreement (ETCA) in FY25, two people said. ETCA builds on a previous free trade agreement (FTA) that came into effect in 2000 and enhances bilateral trade between neighboring countries. India and Sri Lanka resumed negotiations on ETCA in November 2023 after a hiatus of about five years, as both sides are keen to deepen economic ties between the two countries. The final round was held in January. “Both India and Sri Lanka are motivated to reach an agreement. Negotiations are progressing rapidly,” said one of the people cited, speaking on condition of anonymity.
“This ECTA could be concluded between 2024-25,” they added.
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“This ECTA could be concluded between 2024-25,” they added.
Maintaining good trade and diplomatic relations in the region is key for India as it seeks to counter China. India and Sri Lanka have held 13 rounds of talks so far.
In the latest round, officials assessed the situation to date and discussed chapters on rules of origin, dispute resolution, technical and non-technical barriers to trade, etc.
Spokespeople for the Foreign and Commerce ministries did not respond to email inquiries.
“The 13th round of ETCA negotiations concluded last month and we are currently coordinating the schedule for the next round in Sri Lanka. Although substantial progress has been made, further progress remains to be seen on both ETCA and the Bilateral Investment Agreement. It will be decided in the next round of negotiations,” the Sri Lankan High Commission said in response to a question from the Mint.
Further rounds will be held after the general election. According to an earlier statement from the Ministry of Commerce, India and Sri Lanka resolved nine key issues during November while reviewing progress on ETCA.
Issues such as clothing, pepper allocation, and medicine procurement were also discussed.
Both India and Sri Lanka have decided to continue talks and explore new options to resolve the issue.
However, further progress on the proposed deal is expected only after India’s general elections, scheduled to be held in April-May 2024, the second person cited above also said on condition of anonymity.
Meanwhile, presidential elections are scheduled in Sri Lanka from September to October in the second half of 2024, and incumbent President Ranil Wickremesinghe is aiming to continue in office.
Since taking office in 2022, Wickremesinghe has promoted closer ties with India. During his visit to India in 2023, the two countries agreed to pursue economic connectivity agreements on power grid connectivity and oil pipelines.
India is a key partner of Sri Lanka and played a pivotal role in the economic recovery during the economic crisis that began in 2019 and threatened to derail the South Asian country’s economy.
During the crisis, which peaked in 2022-2023, the island nation saw high inflation, near depletion of foreign exchange reserves, and shortages and rising prices of basic necessities.
The IMF extended support by $3 billion, while India provided more than $4 billion to support Sri Lanka’s economic recovery.
India’s financial support included credit facilities, currency swap agreements, and deferrals of import payments.
According to data from the Ministry of Commerce, India’s exports to Sri Lanka from April to December 2023 were $2.65 billion, an annual decline of 36.66%, while imports were $943 million, an annual increase of 17.93%. did.
Although India’s overall global trade remained in the red in the April-December 2023 period, its trade balance with Sri Lanka was in surplus at $1.71 billion.