COLOMBO: Despite the existence of a Free Trade Agreement (FTA) between the two countries since 2000, the rate of growth of Sri Lanka’s exports to India is on the decline, says Verite Research, a Lankan think tank.
It found that the very encouraging initial boom in Lankan exports could not be maintained because of Non-Tariff Barriers (NTBs) in India.
In 2001, Lanka’s exports to India was worth just US$ 100 million, but this rose “rapidly” to US$ 500 million in 2005, thanks to the FTA. But thereafter, the growth rate declined “significantly”, with the result in 2014, Lankan exports to India barely managed to cross US$ 600 million.
Taking the case of the export of processed food, Verite Research found that between 2001 and 2005, exports shot up from US$ 1 million to US$ 28 million, but only to decline thereafter to US$ 7 million in 2014. Significantly, Lankan food exports to other countries went up in the same period.
The main NTB faced by Lankan exporters of food products in India, is the non-recognition of Lankan standards. Though an agreement was reached in 2006 on mutual acceptance of standards certificates issued by the two countries, it has not been implemented. And even this agreement is based on the “harmonization” of the standards of the two countries, which has not even begun.
In 2002, Lanka and India had entered into an agreement on recognizing standards, but that was completely one sided, with Lanka recognizing Indian standards certificates unilaterally.
Verite Research found that Lankan food exporters face cost and delay issues because of quality testing hassles. Getting a sample tested may cost US$ 4.5 to US$ 70. Test results my take 20 to 30 days to arrive. Food products which have a short shelf life suffer the most, as a result.
As a way out, Verite Research suggests a Mutual Recognition Agreement (MRA) on standards of the kind India has signed with Japan, China, Singapore and South Korea. In that case, a product certified by the Sri Lanka Standards Institution will automatically be allowed to enter India.