The commercial relations between Sri Lanka and India has marked a historical milestone when it was signed the India-Sri Lanka Free Trade Agreement (ISFTA) on 28th December 1998, as the 01st bilateral free trade agreement of Sri Lanka. The ISFTA entered into force with effect from 01st March 2000. The ISFTA is now in full implementation as both sides have completed their phasing out commitments under the respective Tariff Liberalization Programme (TLP), as explained below.

 

TLP of ISTFA (at HS-1998 version 6-digit level)

 

Commitments  By India
By Sri Lanka
Negative Lists (NL)
No concessions by both countries
No of 429 Tariff Lines (TLs) are under NL
No of 1,180 TLs are under NL
Zero Duty List
100% immediate duty reduction
was effected 1.3.2000
No of 1,351 TLs are under this category
No of 342 TLs are under this category
Residual List
50% margin of preference(MOP) with
effect from 1.3.2000
No of 2,799 TLs are under this and the MOP
in these items increased to 100% in two stages
within three years from 1.3.2000
No of 880 TLs are under this and the MOP in these items
increased to,
- 70% at the end of the 1st year
- 90% at the end of the 2nd year
- 100% at the end of the 3rd year
Phasing out List
Not applicable for India
Tariffs of no of 2,802 TLs brought down by Sri lanka as follows
- not less than 35% before the end of the 03rd year
- not less than 70% before the end of the 06th year
- not less than 100% before the end of the 08th year

The tariff of two items of HS Codes 2523.21 and 2523.29 were reduced
at end of 8th years from 1.3.2000,despite these items are in the NL of
Sri Lanka
Tariff Tate Quota
(TRQs)
- For Garments: 8 million pieces at Zero duty (per annum),
  being in the NL
- Tea: 15,000 MT at 50%MoP
- Pepper: 2,500 MT at Zero duty (per annum)
- Desiccated Coconut: 500MT at 30% MOP (per annum),
  being  in the NL
- Vanaspati, bakery shortening and margarine: 250,000 MT at zero
  duty (per annum)
- Textile: 528 TLs with no quantitative restrictions at MOP of 25%.
No TRQs by Sri Lanka

 

The Products of Sri Lankan origin exported to India ISFTA are duty free at present,except the following categories

  1. Products of the NL of India - No of 429 TLs.
  2. Products of India’s TRQ Lists as follows.
-                    -   For Garments  : 8 million pieces at zero duty
-                    -   Tea: 15,000 MT at 50%MoP
-                    -   Pepper: 2,500 MT at zero duty
-                    -   Desiccated Coconut: 500 MT at 30%MoP
-                    -   Vanaspati, bakery shortening and margarine: 250,000 MT at zero duty
-                    -  Textile: 528 TLs at 25% MoP.

NB: MoP-Margin of Preference

Pl. visit the following website of India for the ISFTA duty concessions and the other tariff information of India: http://www.indiantradeportal.in/index.jsp

 

 

The products of Indian origin exported to Sri Lanka under ISFTA are duty free at present, except the products of
1,180 TLs included in the NL of Sri Lanka under ISFTA.

Pl. visit the following website of Sri Lanka for the ISFTA duty concessions and other tariff information of
Sri Lanka
: http://www.customs.gov.lk/classification/tarrif 

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Rules of Origin (ROOs) Criteria for export products which are not wholly obtained or products in Sri Lanka (with imported inputs)

  1. Minimum Domestic Value Addition (DVA)- 35% of FOB price
  2. With inputs from India -Minimum DVA in Sri Lanka is 25% of FOB price and the Aggregate Value Addition (Sri Lanka+ India) should be at least 35% of FOB price.
  3. Change of Tariff Heading (CTH) at HS 4-Digit Level
  4. Sufficient Working or Processing in Sri Lanka
  5. The final manufacturing process should take place in Sri Lanka
  6. Direct Consignment

 

Statistical Analysis