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An Overview of Indo-Lanka Free Trade Agreement Milestones
- 28 December 1998 - Signing of the Free Trade Agreement in New Delhi by the Prime Minister of India and the President of Sri Lanka.
- 2 February 2000 - Letters of Exchange to finalise the annexures.
- 1 March 2000 - Full implementation of the Free Trade Agreement.
- Establishment of a Free Trade Area through complete or phased elimination of tariffs
- The FTA does not remove all tariffs on all goods at once.
- Negative Lists to protect national interests of both countries.
- The Rules of Origin (ROO) criteria to ensure a minimum local
content.
- Adequate safety clauses to protect domestic and national
interests of both countries.
- Review and consultation mechanisms to ensure the smooth operation of the Agreement.
- Granting duty free access for 1351 items by 6 - digit HS Code upon entry into force of the Agreement (Annexure E).
- 25% tariff reduction for 528 Textile items (all Textile items in Chapters 51, 52, 58, 59, 60, 63 and a majority of Textile items in Chapters 53-56 of the HS code) (Annexure A, Para 1(b)).
- Other than the 429 items in the Negative List of India (Annexure D (i)), 50% reduction of tariffs for the balance 2799 items, upon entry into force of the Agreement followed by phased out removal of tariffs up to 100% in 2 stages within 3 years. Tea and Garments come under a special quota regime.
- A 50% fixed tariff concession for imports of Tea from Sri Lanka on a preferential basis subject to an annual maximum quota of up to 15 million kg (tariff lines 0902.10, 0902.20, 0902.30, 0902.40 and 2101.20).
- A 50% fixed tariff concession for imports of Garments from Sri Lanka (under HS Chapters 61 and 62 while remaining in India's Negative List) subject to a maximum annual quota of 8 million pieces of which a minimum of 6 million pieces should contain Indian fabrics. No category of Garments could exceed 1.5 million pieces per annum.
- Granting duty free access for 319 items by 6 - digit HS Code (raw materials and machinery for industries) upon entry into force of the Agreement (Annexure F I).
- 50% reduction of tariffs for 889 items by 6 - digit HS Code (raw
materials) upon entry into force of the Agreement (Annexure F II)
followed by phased out removal of tariffs as follows
- up to 70% at the end of the 1st year
- up to 90% at the end of the 2nd year
- 100% at the end of the 3rd year
- For 1180 items in Sri Lanka's Negative List (Annexure D (ii)) there will not be any duty preference.
- For the remaining 2724 items by 6-digit HS Code, upon entry into
force of the Agreement, the removal of tariffs will be phased out
within 8 years as follows:
- Not less than 35% before the end of the 3rd year
- Not less than 70% before the end of the 6th year
- Not less than 100% before the end of the 8th year
