Study on China-Sri Lanka Free Trade Agreement

minimal due to stringent ROO requirements and port restrictions in India. Nevertheless, tea, readymade
garments, and textiles, which made up 50 per cent exports to India, have improved to a
certain extent following of the relaxation of ROO and port restrictions in 2007 (Table 2.1).
Table 2.1: ILFTA Tariff Rate Quotas
Product Tariff Preference Quota Other Restrictions
Tea
Garments (Chapters 61
& 62)
Standard duty rate of
7.5%
15 million kg annually • Entry allowed only
to the ports of
Cochin and Kolkata.
50% • 8 million pieces per year
– 6 million of which need
to have material sourced
from India to receive
preferences.
• 3 million garment pieces
now enjoy duty-free
access to India
• Port restrictions
were relaxed in
2007
-
Textile (Chapters 51-60
25% - -
and 63, except few
items in Chapters 53-56)
Source: Table 2, de Mel, Deshal, undated, India – Sri Lanka, Pakistan – Sri Lanka Bilateral Free Trade
Agreements, Institute of Policy Studies of Sri Lanka.
Ready-made garments were granted preferential market access of 50 per cent for 8 million pieces
per year while textiles were granted a preferential margin of 25 per cent with no quantitative
restrictions. 59 Out of the 8 million pieces, 3 million were required to have Indian fabrics as per the
ROO. 60 In 2013, the Indian textile usage conditionality was completely removed. 61
Tariff liberalization under ISFTA:
India and Sri Lanka have liberalized their tariff schedules gradually since the implementation of the
ISFTA over different time periods due to the economic asymmetry between the two countries. While
India had a three-year tariff phase-out period (reduced 50%, 75% and 100% of tariffs by 2003), Sri
Lanka liberalized its tariff schedule over an eight-year period (reduced 35%, 70% and 100% of tariffs
by 2008). Under the Agreement, India has allowed duty-free access to 1351 tariff lines and has
granted a preference margin of 50 per cent for the remaining 2,870 products initially. In turn, Sri
Lanka has allowed duty-free access to only 319 tariff lines and has granted 50 per cent preference
59 Kelegama, S & C. Karunaratne (2013), “Experiences of Sri Lanka in the Sri Lanka-India FTA and the Sri Lanka-
Pakistan FTA,” Background Paper on Regional Value Chains, UINCTAD, available at:
[http://unctad.org/en/PublicationsLibrary/ecidc2013misc1_bp10.pdf]
60 de Mel, Deshal, undated, “India – Sri Lanka, Pakistan – Sri Lanka Bilateral Free Trade Agreements”, Institute
of Policy Studies of Sri Lanka.
61 Kelegama, S & C. Karunaratne (2013), “Experiences of Sri Lanka in the Sri Lanka-India FTA and the Sri Lanka-
Pakistan FTA,” Background Paper on Regional Value Chains, UINCTAD, available at:
[http://unctad.org/en/PublicationsLibrary/ecidc2013misc1_bp10.pdf]
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