Wednesday, June 11, 2008

Bilateral trade increased 4 times

by Jo Black

The India-Sri Lanka FTA, which was completely implemented by March 2008, has increased the bilateral trade by 4 times since 2000, according to a FICCI study.

The FICCI study pointed out that the total bilateral trade increased by 4 times in the post-FTA period to reach $2.7 billion in 2006-07 from a mere $685 million in 2000-01.

The FTA implementation period for India was from 2000 to 2003, whereas for Sri Lanka, the implementation period was 8 years i.e. from 2000 to 2008.

The FICCI study also observed that India has taken a lead over Japan in the post-FTA period in terms of share in Sri Lanka’s global imports.

In 1999, India’s share was 9.5% of Sri Lanka’s imports and it was the second largest importer after Japan.

But in 2005, India achieved a share of over 17.3% of Sri Lanka’s imports and became the largest importer.

The FICCI study further pointed out that prior to the FTA, the bilateral trade between India and Sri Lanka grew by just 10% per annum in the seven year period i.e. from 1993-99.

However, the FTA really accelerated the trade flow between the two countries and it grew by over 27% in the post-FTA period i.e. from 2000 to 2006.

Sri Lanka has also improved its presence in Indian markets in the post-FTA period.

In the pre-FTA period, Sri Lanka was ranked at 61 position in India’s global imports, observed the FICCI study.

Although, the share of Sri Lanka in India’s global imports was not significant its position improved from 61 to 34 by 2006-07.

In terms of composition of bilateral trade, some important changes occurred in the post-FTA period, pointed-out FICCI study.

In 1999-00, cotton, automotive, vegetables, pharmaceuticals and machinery and appliances were the top 5 items of Indian exports constituting around 50% of our total exports to Sri Lanka.

However, in 2006-07 mineral fuel, and iron and steel, replaced vegetables and machinery, in the top 5 items of exports to Sri Lanka.

Around 30% of India’s exports to Sri Lanka constituted mineral fuels in the post-FTA period.

Exports of mineral fuels registered an unprecedented increase from almost nil in 1999-00 to $702 million in 2006-07 to Sri Lanka.

Similarly, iron and steel increased by more than 4 times in the post-FTA period.

Imports also witnessed a change in composition in the post-FTA period.

Vegetable/animal fats and oils became the largest importing items of imports from Sri Lanka replacing tea and coffee in the post-FTA period, highlighted the FICCI study.

 

 

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