22 November 2017 10:20 am
The opportunities in boosting trade and economic ties between India and Sri Lanka are yet to be realised as the fast-growing informal trading between the two nations, which has been in practice for decades, has not received the necessary attention, a top visiting economist from India pointed out on Monday.
Economist and former Finance and Economic Affairs Secretary of the Government of India Dr. S. Narayan, while pointing out that the two nations continue to hunt for new avenues to strengthen the trade agenda, noted that a blind eye continues to be turned towards the informal “box” trading between India and Sri Lanka.
“The question we need to ask ourselves is that are both the nations comfortable leaving this trade form to continue in an unorganised manner? This is a cash trade, which is tangible and can be misused in many different ways,” pointed out Dr. Narayan during his lecture in Colombo,
last evening.
He made these observations during his address themed ‘India-Sri Lanka Economic Relation in Modi’s India,’ an event co-hosted by the Institute of Policy Studies (IPS) and Lakshman Kadirgamar Institute (LKI).
Sri Lanka and India have a free trade agreement in operation since the year 2000 and currently the two countries are looking at ways to expand this agreement to the services sector under the proposed Economic and Technology Cooperation Agreement (ETCA) It was pointed out that the so-called box trade, which operates largely between Tamil Nadu and Sri Lanka, has shot up within the last two to three years and grows at average annual rate of 12 to 14 percent.
According to Dr. Narayan, a group in Thoothukudi largely controls the said informal trading, where the interest lies in Lankan manufactured/branded goods such as cement, automobile spare parts and construction materials, along with items such as cigarettes, cosmetics and
packaged foodstuff.
The significant increase in this particular trade form was attributed to the increase in the number of flights between the
two countries.
“There is a huge opportunity of converting this into a formal trade by taking it through the right channels. These opportunities are not theoretical and are real, which have increased in the last two to three years. You know the bottlenecks, so why not address them and make use of the opportunity,” he said.
Meanwhile, Dr. Narayan also pointed out that in the recent years, the Sri Lankan companies established in India are performing exceptionally well and in certain sectors better than the Indian entities.
“In certain sectors the standards of Indian products have gone up to match Sri Lankan standards. There are several stories where Sri Lankan businesses are starting to make headway in India and creating opportunities for themselves,” he said.