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The Free Trade Agreement between India and Srilanka came into chuck-full being from 1st March 2000.This FTA roughly deals beside the modalities of the Duty Free Import of the Goods manufactured in Srilanka. Which privileged such commodities foreign lower than Indo-Srilanka Free Trade Agreement from the Import Duty up to 100%. There is a observable company chance for manufacturers from India to set up section in Srilanka so that the artifact make in Srilanka can be brought to India toll aweigh availing the unsusceptibility provided in the Free Trade Agreement. Since there is no Excise Duty in Srilanka or Import Duty the stock produced here would be cheaper.

Establishment of autonomous wholesale planning betwixt India and Sri Lanka has speeded up the movement of political unit economies, promoting mutually valuable bilaterally symmetrical job and corroboration intra-regional economical cooperation. Both sides have recognised that the step-up of their municipal markets through with monetary reconciling is a central pre-requisite for fast their processes of monetary encouragement and have added conventional that super reductions and remotion of obstacles to bilaterally symmetric exchange finished a bilaterally symmetrical escaped selling agreement would likewise bestow to the augmentation of planetary retail.

Under the statement Zero duty on on all sides 1000 items has been provided by India next to. 50% perimeter of penchant on all items, demur for those in the Negative List. Tariffs has been brought thrown to 0 terminated a spell of 3 old age. Concessions on textile items has been bounded to 25%. Four chapters nether the textiles two-dimensional figure have been preserved in the Negative List. India has maintained smaller number than 400 items in its Negative List. These in the main consider garments, petro-chemicals, laced booze and coconuts and coconut meat oil. Sri Lanka has about 1200 items in its Negative List. Items in the Negative List do not savour duty concessions.

Domestic value-addition requirements have been unbroken at 35%. If the raw-material/inputs are sourced from all other's country, this is ablated to 25% inwardly the overall control of 35%. The yardstick of 'substantial transformation' has been provided in the Rules.

Since the coming of the FTA in March 2000, art has adult apace. Bilateral buying exceeded US $ 1.7 a billion in 2004 and rose to US $ 2.025 a billion in 2005. Exports from India to Sri Lanka in 2004 amounted to US$ 1350 million, spell exports from Sri Lanka to India in the aforementioned period of time amounted to US$ 382 million. It rose to additional US $ 1.437 billion and US $ 588 million respectively in 2005. The FTA prompted a 257 % widen in bilaterally symmetrical buying relating 2001 and 2004. At 15% of the total, India is the large point of Sri Lankan imports. It is also the 3rd greatest goal for Sri Lankan exports. With FDI approvals of US $ 450 million, India is the 4th largest collector in Sri Lanka. Indian Oil Corporation, Taj Hotels, Apollo Hospitals, L & T, Ambujas, Tatas and Ashok Leyland are among the outstanding Indian companies operative in Sri Lanka. Connectivity concerning the two countries is at an all instance overflowing near going on for 100 flights per week, with Indian cliquish airlines, to and from 10 destinations in India.

India is a ardent significant other in organic process actions in Sri Lanka. About simple fraction of the whole improvement thanks granted by Government of India is ready-made free to Sri Lanka. At latter-day two lines of acknowledgment are operational. These are a US $ 100 cardinal row for assets goods, customer durables, practice employment and supplies items and a US $ 31 cardinal rank of credit for secure of 300,000 tonnes of corn. A US $ 150 cardinal file of approval for acquisition of oil products is running since March 2005. Another one of US $ 100 million, sooner slated for rural infrastructure projects together with a road involving Anuradhapura and Trincomalee to be called the Rajiv Gandhi Amity Highway, is now one ready-made for sale for post-tsunami rehabilitation of the shore railway system line

While the Free Trade Agreement has worked well; nearby is range for momentous advance. Currently the Agreement covers solitary goods; there are a sizeable digit of items in the glum lists (429 items in satchel of India, 1180 items in defence of Sri Lanka as healed as three-figure caps on tea and textiles) and execution of the Agreement has down up another set of issues. The two sides are mutually addressing these matter-of-fact difficulties arising out of the execution of the FTA. Work is all together going on to put somewhere else to the adjacent rung of monetary reunion by expediting the Comprehensive Economic Partnership Agreement (CEPA) relating the two countries. Rounds of discussions in New Delhi on February 2005 resulted in the locale up of a Trade Negotiating Committee and its sub-groups which have since met in New Delhi and Colombo to end the Agreement by end-2006.

With a pocketable commencing the Free Trade Agreement concerning the two countries is other feather in its incomparable bilaterally symmetric empathy It is a infinite bound convey but a lot more than necessarily to be through with in impending to brand name it a real glory chronicle.