Financial Times

CEPA critics are those who had a bad experience in India
By Chathuri Dissanayake

Exhibits at this week’s SAARC fair in Colombo. India and Sri Lanka are among South Asian countries taking part.

Individuals critical of the proposed CEPA with India are those who had a bad experience in India while doing business under the FTA, according to the Secretary to the Ministry of Export development and International Trade S. Ranugge.

He said that it was due to the lack of expertise to deal with the situation on their part that led them to their failures, not a fault of the agreement. “Both countries have benefited from the FTA. Whoever speaks against the FTA are people who have had bad experience in India. They have attempted doing business in India under the FTA but have not been successful; this is the reason why they say the FTA is not effective. They have to have an Indian partner to do business there and it is the way they have handled the business that have failed them, not the agreement. They have not worked properly with the Indian government agencies to get out of the difficulties they faced in India,” said Mr Ranugge in an interview with The Sunday Times FT discussing the recent controversy over the CEPA.

According to him Sri Lankan exports to India have increased due to the implementation of the FTA as many of the exports come under the FTA. In 2000 Sri Lankan exports to India totalled US$55.65 million worth of goods and this has gone up to US$516.4 million in 2007. Out of this only $8 million was from FTA items in 2000 whereas $437 million of the total exports were from FTA items in 2007.
However he also said that there is some truth in complaints made by Sri Lankan exporters about facing difficulties when they try to export to India even under the FTA.

“I don’t deny that there are difficulties in doing business in India. We should understand their culture, language and the environment there. For more than 30 years they have not opened the market, they joined the open economy much later so we have to understand that they are still protecting their market, they still have old values. The documents are fine but the implementation is a bit tricky because there are non-tariff barriers. I know there are problems and we are discussing with the Indian government to iron out these difficulties. In time to come they will be more conducive for an open market,” he said.
According to him at present both countries have introduced a mechanism to monitor and give solutions to the difficulties that the business community may face.

Mr Ranugge said that even though India may be exporting four or five times higher than the volume that Sri Lanka exports to India both parties have a positive impression about the FTA. He was positive that things will improve and said that Sri Lanka hopes to increase exports from US$ 500 million to US$ 1.5 billion in about five years. However he said that it is unfair to say that the government has not discussed with concerned parties when formulating the agreement and that it was done in secrecy.

“Those who are against this are not aware of the process. The negotiations for CEPA started long ago in 2002 with the then government keen on having CEPA. There have been over 15 government-to-government meetings from 2003 to 2006. So it is not something that came up all of the sudden. There was a request from the Indian government to sign the framework agreement during the SAARC summit. We are now discussing the schedules to be included in the agreement. There will be four schedules on goods, services, investments and movement of people. We are trying to reduce the negative list where both parties will be benefited,” he said.

He said the ministry has got all the stakeholders concerned such as the three chambers, government agencies and professional bodies involved in ongoing discussions on CEPA. He added that the government officials have taken all recommendations and concerns of the stakeholders into consideration when negotiations were held with the Indian government and their agents.
Further according to him concerns over India dominating Sri Lanka are misplaced. He said that he has never come across a situation where they have tried to ‘dominate us’.

Addressing concerns raised by many industrialists as to whether Sri Lankans will get opportunities to work in India, Mr Ranugge said that he has no fear about local people being accepted in the Indian market.

“If Sri Lankans possess correct qualifications they will be recruited by Indian companies regardless of race or religion. There are over 2000 people who are working in India even now. In 2000 India signed a similar agreement with Singapore and it is working well for both countries,” he said.

Further he said that Sri Lankans will have opportunities in many industries in the service sector and will benefit from the agreement as it will give access to expertise that the country needs at present.
“For instance India does not have quality quantity surveyors in the country and our surveyors can go for opportunities in India. We can get their ICT expertise in opening up BPOs in the country as they have a good ICT sector,” said Mr Ranugge.

He also dismissed fears that the local youth will go out of jobs if CEPA is implemented as limits will be imposed on who is allowed to enter this market and gain employment. However there will be flexibilities in some areas when required, as in the case of difficult production tasks such as burner operators the investor will be allowed to bring in labour from India.

Further the CEPA is to include a mechanism to monitor the difficulties both parties may face in the implementation of the agreement. The two countries have agreed to hold a meeting at secretaries’ level once in every six months to iron out any of the difficulties that may arise on implementation. Further once a year Commerce Secretaries of both countries will meet to discuss issues and negotiate solutions.
“This way it will be a smooth operation. India is an important market for us, we should go into business with them; there are plenty of opportunities there. But it will be in the basis of give and take,” said Mr Ranugge.

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