On the invitation of Dr. P.B. Jayasundera, Secretary, Ministry of Finance and Planning of the Government of Sri Lanka, Mr. S. R. Rao, Commerce Secretary of the Government of India visited Sri Lanka on 24-25 June 2013 for official talks.  The delegation level talks were co-chaired by Sri S. R. Rao and Dr. P.B. Jayasundera to discuss issues relating to the implementation of India-Sri Lankan FTA, trade,investment, economic cooperation and related issues, along with the subject of moving towards an upgraded, comprehensive framework for economic engagement. The current round of consultations was a follow up of the visit of Hon. Anand Sharma, Minister of Commerce, Industry & Textiles of India in August 2012 and to discuss the way forward to implement the key decisions arrived during the eight meeting of India-Sri Lanka Joint Commission (January 2013) and visit of Dr. P. B. Jayasundera, Secretary (Treasury), Ministry of Finance & Planning to India (April 2013).

During the talks decisions were taken to enhance trade and investment ties; address the grievance of Sri Lankan side regarding the imbalance in trade and difficulties in accessing the Indian market and address outstanding issues pertaining to the FTA. Both sides also initiated dialogue on forging a special economic partnership for comprehensive and sustained economic cooperation. It was agreed that there was considerable potential to expand bilateral trade, in a balanced manner through optimal utilization of the opportunities available between the two economies.

Both sides discussed specific suggestions to expand trade and investment ties. The Sri Lankan side offered to attract Indian investment to increase their export capacity and seek to establish greater linkages with production and supply chains in the Indian market. It was agreed that thrust area should be to establish greater linkages in trade, tourism and investment. The Sri Lanka side offered to attract Indian investments, inter alia, in the manufacture of automobile parts, pharmaceuticals, textiles and engineering products. The investments could be in the form of joint venture projects to encourage Sri Lankan private sector and state enterprises to work together with Indian enterprises. The two sides agreed to cooperate closely to forge closer economic and trade linkages and take steps to double the bilateral trade to reach US $ 10 billion in next three years.

During the meeting progress on FTA-related issues, including those pertaining to customs procedure, quotas for garments, import licence for processed meat and products and plant quarantine for fruits were discussed.  The Indian side reiterated its offer for 8 million pieces of apparel to enter the Indian market from Sri Lanka. The Indian side has removed the fabric sourcing condition for exporting 8 million pieces of apparel. The Indian side also conveyed that the validity period of the licence for processed meat had been extended from six months to one year. The quarantine restrictions on Rambutan and Mangosteen had also been dispensed with. The issue of tacking NTBs and evolving a mechanism to resolve trade disputes were also discussed.

The Sri Lanka side requested further market access for apparel, tea and pepper in order to address their trade deficit and facilitate entry of value added products including apparel, high end tea, value added rubber products, floriculture and spices into the Indian market.

During the discussions both sides also agreed to cooperate in the energy sector, including in the field of non-conventional energy. It was decided that both sides would direct their relevant public sector enterprises to identify project in the filed of solar and wind energy for future cooperation. It was pointed out that Sri Lanka has huge potential in the wind energy sector which could be harnessed. The talks also focused on interconnectivity of grid between the two countries. During the off peak period, the Sri Lankan side can export excess power to India and revenue, which would bridge the trade deficit.

The two sides identified tourism as a thrust area for cooperation and agreed to review the current MOU on Cooperation in the field of tourism. In this context, both side noted the importance of connectivity between the two countries and acknowledged that current levels of connectivity between India and Sri Lanka is best in South Asia region for free movement of people, goods and services. Both sides agreed to the need to resume ferry service between Talaimannar and Rameshwaram and Colombo and Tuticorin.

Both sides agreed to create an optimally supportive framework at both ends, including by entering into Customs Cooperation Agreement, completing the ratification process for bringing into force the Double Taxation Avoidance Agreement signed in January 2013; finalizing an MOU in the fields of textiles, handloom, powerloom and SMEs.  It was also decided that the Department of Commerce on both sides would be the focal points to coordinate and resolve problems arising from NTBs, by appointing suitable nodal officers from each side.

The first meeting of the Joint Task Force (JTF) constituted by the two Governments also met on the 24 June. The members of the JTF included representatives of government and private sector. The JTF meeting was co-Chaired by Mr. Anura Siriwardena, Secretary, Ministry of Industry & Commerce and Mr. Arvind Mehta, Joint Secretary (Free Trade & South Asia). The meeting of the JTF, inter alia, discussed the status of the ISLFTA, measures required to enhance bilateral trade, review of the negative lists, addressing NTBs, increasing investment and improving tourism. Infrastructure Leasing & Financial Services Ltd. (IL&FS), a private sector participant from Indian side offered their expertise in development of infrastructure and skills training in the automobile, pharmaceuticals, textiles, engineering, infrastructure and tourism industries.

Mr. S. R. Rao, Commerce Secretary also called on Hon. Basil Rajapaksa, Minister of Economic Development and  Hon. Rishad Bathiudeen, Minister of Industry & Commerce. During the meetings, the Sri Lankan Ministers conveyed their appreciation and gratitude to Hon. Anand Sharma, Minister of Commerce, Industry & Textiles of India for fulfilling the promises made during his visit to Sri Lanka in August 2012. 

The Commerce Secretary of India also had an interactive session with the members of the Ceylon Chamber of Commerce and Sri Lankan exporters. The Indian CEOs Forum also organized an interactive session with the Commerce Secretary. 

It was decided to hold next round of consultations in October 2013 at a mutually convenient date in India.