Free Trade Agreement

Free Trade Agreement

The India -Sri Lanka Free Trade Agreement was signed on December 28, 1998 with an overall objective to promote trade and economic relations between the two countries and promote FDI. It entered into force from March 1, 2000. The focal points are the respective Ministries of Commerce and Industry.

The Foreign Trade Agreement can be accessed here.

Highlights of the FTA

India has implemented zero duty on 4150 tariff lines for exports from Sri Lanka. The list of such items is available here.

Sri Lanka has implemented Zero duty on 1208 tariff lines for Indian exports to Sri Lanka. The list of such items is available here.

Sri Lanka has also progressively liberalised its duties to reach zero-level in respect of additional 2724 tariff lines in November 2008. The list of such items is available here.

As of now, 1180 tariff lines remain in the Sri Lanka’s negative list that includes Agriculture/livestock items, rubber products, paper products, Iron and Steel, machinery, and electrical items. Sri Lanka’s negative list is available here.

On the Indian side, there are 429 items in the negative list, which include garments, plastic products and rubber products etc. India’s negative list is available here.

Further, India has offered quotas to Sri Lanka on certain tariff lines:

    (a) 15 million tonnes of Tea (5 tariff lines) with 50% margin of preference on which port entry restrictions that existed earlier have been removed in June 2007;

    India’s list on which Tariff Rate Quota (TRQ) has been granted (tea and garments) is available here.

    Modalities for the Export of Tea under TRQ is available here.

    Customs circular on removal of Port Entry restrictions on Tea exports under TRQ by India is available here.

    (b) Textiles, where there is a 25% tariff reduction for 528 Textile items;

    India’s concession list of Textile items with 25% MOP is available here.

    (c) Garments where the 50% margin of preference on 8 million pieces over 233 tariff lines has been further liberalized through an MoU on October 5, 2007. The Government of India has issued a Custom Notification No. 52/2008 dated 22nd April 2008 giving immediate effect to the MoU. As a result, India has reduced duty to zero and removed restrictions on entry ports and sourcing of fabrics from India for 3 million pieces of apparel products from Sri Lanka. India has also removed port restrictions on the balance 5 million pieces of apparel products.

    India’s list on which Tariff Rate Quota (TRQ) has been granted (tea and garments) is available here.

    Modalities regarding quota on garments

An important element of the FTA is the Rules of Origin (ROO) criteria to ensure minimum local content. Under the FTA this is reduced to a level of only 35% of FOB value as against 40% under SAPTA. The Rules of Origin can be accessed here.

Other Important FTA Documents

Modalities with regard to export of Vanaspati, Bakery Shortening.

Modalities with regard to export of Pepper and Desiccated Coconut.

Link to the FTA Website of Department of Commerce, Government of India.

Link to the FTA Website of Department of Commerce, Government of Sri Lanka.

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