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Sri Lanka to announce FTA with India by March ’08

The Hindu, India

Sri Lanka to announce FTA with India by March ’08

By N. Anand

Will offer opportunities to exploit potential in service sectors

# 30-member team to visit India
# FTA will open up IT sector

9 June 2007

CHENNAI: The proposed free trade Agreement (FTA) between Sri Lanka and India
can become a reality by March 2008. It would trigger trade between the two countries and offer opportunities to exploit potential in service sectors such as finance, tourism, health and education, said CII Southern Region Chairman P K Mohapatra on his return from Colombo on Friday.

Talking to The Hindu , Mr. Mohapatra said, "India has already opened its door to Sri Lanka by implementing the FTA and it was quite natural that Sri Lanka also did it."

India had FTAs with most of its neighbours. India ranked no.1 in trade with Sri Lanka at $1.2 billion and accounted for nearly 20 per cent of total trade. The proposed FTA would offer tremendous opportunity for Indian firms to use Sri Lanka as a market and a base to grow.

"We also had a meeting with the Ceylon Chamber of Commerce (CCC) and the Board of

Investment of Sri Lanka. They are bullish about India and want to tag along with India to achieve accelerated growth. This is for the first time, I heard several Ministers talking about India in glorious terms, that too in front of a Lankan audience," he said.

Tourism sector

Several Sri Lankan businessmen expressed their interest to invest in southern states, particularly in the hotel and tourism sector. A 30-member delegation headed by CCC General Secretary Prema Cooray would visit India in August 2007 to forge ties and explore opportunities to set up joint ventures in the tourism sector. "They are also keen to buy small FMCG and tea firms and not industrial products," he said.

Mr. Mohapatra led a seven-member high-powered CII business delegation to Colombo from June 5 to 7 to explore business opportunities and strengthen the existing ties.

"When it comes to investment, there are apprehensions about ethnic problems. Undoubtedly, it is real. Meanwhile, the Lankan rupee has slid against the Indian rupee from 1.5 to 2.75 and this works as an added advantage. Besides, an investor can gain, as it would be cheaper to hire a software engineer in Colombo than in India for $400 a month.

The implementation of FTA would throw open IT & BPO sectors too. Right now, Sri Lanka annually produces 5,000 software engineers."

To help Small and Medium Enterprises (SMEs) in the SAARC region, the CCC was in the process of developing a website for which grants were being given by a German firm. Using the website, Indian SMEs could find their match. "It will be offered free of cost," said Mr. Mohapatra.