The Economic and Technology Co-operation Agreement (ETCA) with India is expected to increase Sri Lanka’s competitiveness in industrial exports and help Sri Lanka gain better access to India’s rapidly growing market. Another area Sri Lanka is looking forward to is a free trade agreement with China, where the focus will be on apparels, tea, gems and jewelry, rubber products, coconuts and spices as key industries.
Together the Chinese FTA and the Indian ETCA are expected to give Sri Lanka preferential access to a market of 2.5 billion people and an emerging middle class larger than the whole of the EU. Sri Lanka has also launched negotiations on a free trade agreement with Singapore and is particularly focused on encouraging Singaporean investment into Sri Lanka and new concepts such as re-manufacturing industries.
Sri Lanka’s FTA with Pakistan also provides an opportunity for Indian investors to access that market on a preferential basis by locating to Sri Lanka. There is a possibility of redirecting some of Indo-Pakistan trade currently transmitting through Dubai. The SAARC region is one of the fastest growing regions of the world. India accounts for 78 per cent of the region’s GDP followed by Pakistan and Bangladesh at 10 per cent and eight per cent.