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About Us Impact of FTA on Bilateral Trade

The India-Sri Lanka Free Trade Agreement (ISFTA) has led to significant upturn in overall bilateral trade. In 2011, the overall trade turnover was US$ 4919 million while it was US$ 3020 million in 2010. This is almost an eight-fold increase from US$ 658 million in 2000, when FTA came into effect. According to Sri Lankan Customs trade data the bilateral trade amounted to US$ 4.01 billion in 2012. Sri Lanka?s imports from India amounted US$ 3,483.74 million and exports to India amounted US$ 518.71 million registering a decline of 19.51% and 1.91% respectively as compared to corresponding period of 2011. India had a share of 19.52% and 5.69% respectively in the global imports and exports of Sri Lanka during 2012.

The decline in exports from India to Sri Lanka in 2012 is largely due to steep increase in the excise duty imposed on the import of vehicles on two occasions during the year 2012 that has seriously affected the competitive advantage enjoyed by Indian auto companies and overall volume of vehicles imported from India has declined by 50-60%. This had major adverse impact on the overall bilateral trade. While Sri Lankan exports to India have increased substantially during past 12 years since 2000 when ISFTA came into force, they have lagged behind the high growth in India´s exports to Sri Lanka, resulting in a widening of the balance of trade. This is largely because of the lack of export capacity from Sri Lanka to service Indian requirement and also due to increase in imports from India because of competiveness of our exports. Interestingly, over 50% of our exports to Sri Lanka are outside the list of products covered by the FTA, thereby indicating their overall competitiveness in the Sri Lankan market

Bilateral Trade Figures (US$ Million)

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