Indo-Lanka ETCA talks revived after President’s Indian visit
Sri Lanka has reiterated her commitment to revival of the talks on the Economic and Technological Cooperation Agreement (ETCA) with India, with a view of enhancing trade relations between the two neighbours.
This was decided during the bilateral discussions between Sri Lanka President Anura Kumara Dissanayake and Indian Prime Minister Narendra Modi.
Both leaders acknowledged the potency of the India-Sri Lanka Free Trade Agreement or ISFTA and felt it is time to take the relationship between the two neighbours a step further with the signing of ETCA.
The India – Sri Lanka Joint Statement of Fostering Partnerships for a Shared Future issued after the talks between the two leaders appreciated that the India-Sri Lanka Free Trade Agreement (ISFTA) has enhanced the trade partnership between the two countries
According to the joint statement both leaders agreed that it is now opportune to further enhance the trade partnership by committing to continue discussions on ETCA
So far, the two countries have conducted 13 rounds of negotiations towards reaching an agreement on ETCA.
After a gap of five years, discussions recommenced in November 2023, reflective of both countries’ reemphasising commitment to further strengthen their economic relationships. The last round was conducted in January 2024. According to the officials, the agreement can be finalised by the 2025 financial year.
ETCA, building on the ISFTA established in 2000, is expected to further strengthen economic ties through an enhanced flow of trade and investment, a top official closely connected to negotiations said.
This renewed partnership could put Sri Lanka in a key link to India’s supply chain, leveraging its strategic location and its resources.
ETCA also opens vistas for Sri Lankan businesses to reach out to India’s vast market for expansion and diversification. Collaborations in technology sectors, including IT and telecommunications, would result in skill development, innovation, and knowledge transfer.
The ISFTA, as forerunner to ETCA, represented a landmark in bilateral trade, becoming Sri Lanka’s first free trade agreement when inked on December 28, 1998.
It came into full implementation by March 2000 though the trade imbalance under ISFTA has been substantial.
In the 15-year period, India has exported a total of US $4,023 million worth of goods to Sri Lanka, while Sri Lankan exports to India have reached only $625 million, according to Dr. Naresh Bana, Vice Chairman of the Indo-Sri Lanka Chamber of Commerce and Industry.
Critics also contend that this agreement would eventually affect small-scale industries and technical service providers in Sri Lanka due to the fact that increased competition provided by Indian professionals, particularly in the IT field, may undercut local employment and wages.
Besides, the increased trade deficit may create further economic instability if not carefully managed.
Sceptics fear that closer economic ties could make Sri Lanka more dependent on India at the expense of its economic sovereignty and decision-making autonomy.
Stakeholders are concerned that such dependence could limit the ability of Sri Lanka to act independently on critical economic policies.
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