India and Sri Lanka signed the Free Trade Agreement on 28th December 1998 and further discussions were held be tween India and Sri Lanka on 2nd February 2000 in New Delhi. The Agreement provides duty free market access to both the countries on a preferential basis in a phased manner. India has also agreed to permit limited quantities of imports of tea and garments from Sri Lanka. Tea quota will be 15 million kilogram per annum and garments 8 million pieces.
Indian and Sri Lankan delegations finalised the procedures for effective monitoring of the tea and garments quota today in New Delhi. The Indian delegation was led by Mrs. Rathi Vinay Jha, Additional Secretary, Department of Commerce, Ministry of Commerce & Industry and the Sri Lankan side by Mr. A. Andrew De Silva, Secretary, Ministry of Plantation Industries.
For tea, the nodal agencies would be the Tea Boards of both the countries and for garments the nodal agencies would be the Textile Committee in Mumbai and Textiles Division of the Ministry of Industrial Development, Colombo. To facilitate effective monitoring of the quotas, both the Governments decided that for tea, exports will be through the air and sea ports in Calcutta and Cochin, whereas for garments, it will be Mumbai and Chennai.
The Free Trade Agreement is expected to boost the bilateral trade between India and Sri Lanka and also consolidate the close economic, commercial and political relations between the two countries through increased trade and investments. As of now, India is one of the largest exporters to Sri Lanka and the trade balance is heavily in favour of India.