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CEPA

Indias Service agreement with Sri Lanka

India and Sri Lanka are preparing to begin negotiations over a Comprehensive
Economic Partnership Agreement (CEPA)
What is a FTA and what is a CEPA? And what does this mean for Sri Lanka?
They are basically free trade or preferential trade agreements. In a free trade
agreement, the members agree to reduce trade barriers, import quotas and tariffs,
and to increase trade of goods and services with each other. This increases the
efficiency and profitability of each country.
The FTA between India and Sri Lanka have been ongoing since 1998 and the CEPA
has being negotiated between the two countries for several years now. The bilateral
trading between the two countries have been growing rapidly. Also the number of
leading Indian private sector companies investing in Sri Lanka have increased. India
is Sri Lankas largest trade partner globally.
On the other hand, during the last few years there have been an increasing trend of
Sri Lankan investments to India. For example the most significant ones being
Brandix, MAS holdings, John Keels, Ceylon Biscuits and Atkin Spence.
India is also the largest source of tourists coming to Sri Lanka. The total number of
tourist arrivals from India to Sri Lanka during January-September 2015 was 220,907
i.e approximately 16.8% of the total tourist arrival to Sri Lanka. Sri Lanka is also
among the top ten sources for the Indian tourism market.

Bilateral Agreements
The juridical framework for the relationship is provided by a free Trade Agreement, a
Double Taxation Avoidance Agreement, a bilateral Investment Protection and
Promotion Agreement. Bilateral agreements/MoUs on Air Services, Small
Developmental Projects, Cooperation in Science and Technology also exist.
The main framework for bilateral trade has been provided by the India-Sri Lanka
Free Trade Agreement (ISFTA) that was signed in 1998 and entered into force in
march 2000.
This doesnt mean that there are no disadvantages from signing the CEPA. Some
people believe that a new ETCA agreement which is being planned to be signed is a
CEPA agreement under a different name. The IT professionals in the country have
voiced their reservations over the ETCA that allows free movement of IT

professionals across the two countries, since their might be a risk of large number of
Indian IT professionals gathering in Sri Lanka and thereby impacting job
opportunities for locals.
The apex body of professionals in Sri Lanka, the Organization of Professional
Associations (OPA) has also expressed its deep concern over the proposed ETCA.
They feel its unnecessary as Sri Lanka has sufficient professional resources and
such an agreement to bring foreign professional services to the country can be
detrimental to the local professional resource base.

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