India and Sri Lanka begin talks on economic and technical cooperation agreement

India and Sri Lanka began preliminary official level talks on an Economic and Technical Cooperation Agreement (ETCA) which the two countries hope to sign by year end. 

The four-member Indian delegation was led by Bhupinder Singh Bhalla, Joint Secretary of the Ministry of Commerce. The talks were held for two days in Colombo.  

Officials told Express that since this was the very first meeting, the two sides would only explore the broad contours of the ETCA in terms of what areas it should cover and what it should avoid. They will also state their needs and concerns in the light of the changing economic situation and the experience accruing from the India-Sri Lanka Free Trade Agreement (ISLFTA) which has been in existence since 2000.

While India is looking at the ETCA as a mechanism to enable it to participate in the post-war economic development of Sri Lanka through Indian investments in select areas, the Sri Lankan Government wants to use ETCA to become part of the Indian supply chain, exploiting Indian Prime Minister Narendra Modi’s ‘Make in India’ movement to boost India’s manufacturing sector.

The Sri Lankan Ministry of Strategic Development and International Trade had issued a statement in which it said that the ETCA would enable Indian manufacturers to set up factories in Sri Lanka to export their products to Pakistan, China and other countries with which Sri Lanka has or is planning to have Free Trade Agreements.

Properly exploited, ETCA can bring down the cost of trade between India and Pakistan drastically. At the moment, Indo-Pak trade is 150% more expensive than China-US trade, pointed out Razeen Sally, Chairman of Sri Lanka’s Institute of Policy Studies, a Government-funded economic think tank.   

Even though the stated objective of ETCA is not to open up Sri Lanka to Indian services personnel, there is a widespread and deep-rooted fear among professionals in Sri Lanka that India will eventually find ways of exporting their services personnel to Sri Lanka and take over local jobs by offering their services at a lesser cost. But the Sri Lankan Government has assured the professional bodies in the island that the Government would ensure that the floodgates are not opened to Indian professionals.

India itself is planning to send professionals only into the IT sector and shipbuilding, where there is a need for expertise and higher levels of training. These are also sectors that could boost Sri Lanka’s exports.

Sri Lankan IT bodies claim that they can do without Indian expertise but the Vice President of Google in charge of India and South East Asia, Rajan Anandan, told a conference here recently that Sri Lanka needs not only more IT professionals but also those of a significantly higher grade if it is to be a significant exporter of IT products. 

He pointed out that while Sri Lanka had only 80,000 IT professionals, just one company in India, Tata Consultancy Services (TCS), had 300,000. As regards quality, the 4,000-5,000 highly qualified professionals Sri Lanka has are not enough, Anandan said. The world-class Moratuwa University should not restrict its annual intake to just 100, he added.

At any rate, India gave assurances that it would not thrust anything upon Sri Lanka. Prime Minister Modi has twice said that Indian economic cooperation will be based on Sri Lanka’s needs and priorities. 

On the Sri Lankan side, the Minister of Strategic Development and International Trade Malik Samarawickrama has not only assured that Indians would not be allowed to swallow Sri Lankan jobs but has offered to include a representative of professional and trade organisations in the country’s negotiating team. 

The Government is also working on a National Policy of Trade Agreements which will set out the basic objectives and get the sanction of Parliament. (New Indian Express)