Indo-Lanka trade talks skidding on vegetable oil

By Dilshani Samaraweera

Sri Lanka is to tackle non tariff barriers (NTBs) faced by Sri Lankan exporters using the Indo-Lanka Free Trade Agreement (FTA) at January trade talks in New Delhi.

Trade authorities of India and Sri Lanka are meeting early this year to push the Comprehensive Economic Partnership Agreement (CEPA) forward. The CEPA is aimed at expanding the current FTA on goods, to include services, investment and other types of collaboration between the two countries. But CEPA talks skidded off track last year on a vegetable oil known as vanaspati.

Vanaspati flows from Sri Lanka to India dried up last year after the Indian government canalized its import. India later agreed to a quota of 250,000 MT instead of a free flow of the oil. But vanaspati exports from Sri Lanka are still blocked off by Indian red tape. Meanwhile the quota for the year will expire in March – without being used. Sri Lanka is looking to tackle such non-tariff barriers to trade, at the January talks.

“Although there was a decision at the top level in India for free trade, in the administration down the line, exporters face a lot of NTBs. So we want to resolve these. For instance, in the case of vanaspati, although the Indian government agreed to a quota, the exporters still can’t export, because import permits have still not been issued,” said Dr K Ratnayake, Secretary to the Ministry of Trade.

The Trade Ministry says that if outstanding matters like vanaspati can be resolved, the CEPA agreement could be finalised early this year.