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Indo-Lankan trade pact drops duty on 1,000 items

Tara Shankar Sahay in New Delhi

The Indo-Sri Lankan free trade agreement eliminates duties on a number of commodities.

According to the commerce ministry, India has agreed for zero duty on about 1,000 items. It has also agreed to 50 per cent margin of preference on all items except those on the negative list.

The tariffs will be brought down to zero over three years. India will give concessions on textile items up to 25 per cent.

From the Sri Lankan side, it has been decided to impose zero duty on some 300 items. Besides, 50 per cent margin of preference will be given to another 500 items. The preference has to be "deepened" to cent per cent within three years.

For the remaining items, except those on the negative list, preference will be deepened to cent per cent within eight years.

India has retained less than 400 items on the negative list. These include garments, petrochemicals, spirits, coconuts, and coconut oil.

Sri Lanka is yet to provide its negative list. India has asked Sri Lanka to restrict this to 20 per cent of the total tariff lines. Items on the negative list will not be subject to tariff concessions.

According to the commerce ministry, the domestic value addition has been kept at 35 per cent.

The agreement envisages that three issues are to be finalised within 60 days from its signing. These are the negative lists of both sides, items on which both sides will give cent per cent concession, and items on which Sri Lanka will give 50 per cent concession.

Meanwhile, a senior official of the external affairs ministry said nothing was known about Lankan President Chandrika Kumaratunga's meeting this morning with Congress chief Sonia Gandhi. He said the Lankans had requested the government to arrange the meeting.

He said instead of leaving for her country on Tuesday evening, the visiting dignitary would now leave on Wednesday morning as she wants to meet Indian leaders, including Home Minister Lal Kishenchand Advani.

Another external affairs ministry official pointed out that the internal situation in Sri Lanka is a major cause of concern to Indian entrepreneurs who want to set up business in the wake of the free trade agreement. For instance, the Taj Hotel in Colombo is facing increasing lack of occupancy because of threats from Tamil militants. But he added that the agreement would benefit large Indian companies like the Tatas which have moved into the plantation business on the island.

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