Deepening Economic Cooperation between India and Sri Lanka

This book analyzes the performance and impact of the India–Sri Lanka free trade agreement over the past decade and suggests the way forward. India became an important source of imports for Sri Lanka immediately after the implementation of the free trade agreement. Bilateral trade between the countries increased steadily thereafter, with Sri Lankan commodities finding a large market in India. The composition of trade also changed with an increased number of new goods being traded. The book computes indices and suggests scope for deepening economic cooperation between the two countries by pruning the negative lists for trade in goods, identifying potential investment, and suggesting policies for expanding cooperation in services. In this publication it has emerged that there are substantial benefits that could be reaped through greater cooperation between India and Sri Lanka in the services sector. This has been recognized by both governments and efforts were made to formalize and institutionalize cooperation in the form of a comprehensive economic partnership agreement, the negotiations for which began in 2005. A bilateral services agreement will be very useful, particularly in the context of slow progress of the Doha Round of the World Trade Organization and the delays anticipated in implementing the new commitments in the general agreement on trade in services.