Overview

Details: Category: South Asian Free Trade Area (SAFTA)

The Agreement on South Asian Free Trade Area (SAFTA) aims at further enhancing the programme of regional economic integration through promotion of preferential trade, which commenced with the establishment of SAPTA. All countries completed the respective Trade Liberalization Program (TLP) under the Phase I and II of SAFTA, i.e. brought down tariffs to a level between 0-5 percent on all products other than those in the respective Sensitive Lists. Sri Lanka has been accorded a Special treatment in Rules of Origin under SAFTA.

Discussions on further reduction of Sensitive Lists under Phase III of SAFTA, a proposal of Fast Tracking reduction of SAFTA Sensitive List (reducing peak tariff on all products to 0 - 5% by the year 2020, excluding a small number of about 100 tariff lines) and implementation related matters under SAFTA are ongoing.

SAFTA - at a glance

Date of signing of the agreement	Date of coming into effect	Members	Negotiation approach	Products coverage
06^th January 2004	01^st January 2006	India,Pakistan,Sri Lanka,Afganistan,Bangaladesh,Bhutan Maldives and Nepal	Negative List	All products other than those are in the *sensitive list of the respective member state

*Sensitive Lists under SAFTA

Member State	Number of Products in the Revised Sensitive Lists (in HS 2012 version)
Afghanistan	850
Bangladesh	987 (LDCs) / 993 (NLDCs)
Bhutan	156
India	25 (LDCs) / 614 (NLDCs)
Maldives	154
Nepal	998 (LDCs) / 1,036 (NLDCs)
Pakistan	936
Sri Lanka	925 (LDCs) / 1,058 (NLDCs)

Rules of Origin Criteria (RoO) under SAFTA applicable to Sri Lanka – at a glance

Wholly obtained products	Not Wholly obtained products With Sufficient working or processing
	Value Addition			₊	Change in HS classification
√	General Rule	OR	Cumulative Rule		CTH OR CTSH under PSR
	35% < DVA OR PSR		50% < RAC AND 20% < DVA

DVA = Domestic Value Addition

RAC = Regional Aggregate content

PSR = Product Specific Rules

CTH = Change in Tariff Heading

CTSH = Change in Tariff Sub-Heading

Statistical Analysis

**Sri Lanka's Exports and Imports under SAFTA by Country (Value in US$ Mn.)**
Country	2021		2022		2023		2024		2025
Country	Export	Import	Export	Import	Export	Import	Export	Import	Export	Import
India	89.52	5.26	55.81	2.17	76.56	3.48	153.65	9.60	84.09	13.95
Bangladesh	10.87	2.40	15.93	2.87	13.44	1.82	10.20	0.93	10.84	0.85
Pakistan	0.27	-	0.31	0.00	0.23	0.06	1.21	0.19	0.62	0.60
Maldives	0.29	-	0.64	-	2.18	-	2.72	-	4.75	-
Nepal	0.70	-	0.10	-	0.25	-	0.50	0.00	0.46	-
Total	101.64	7.65	72.78	5.04	92.67	5.36	168.29	10.73	100.76	15.40

**Sri Lanka's Major Exports under SAFTA (USD Mn.)**
HS Code	Description	2021	2022	2023	2024	2025	Share in 2025 (%)
090411	Pepper: Neither crushed nor ground	72.48	42.52	63.02	132.35	49.24	48.87%
080111	Coconuts: Desiccated	13.64	7.65	11.49	17.15	20.16	20.00%
61,62	Apparel and clothing accessories	0.02	2.96	0.42	1.09	11.62	11.53%
Other exports		15.51	19.65	17.74	17.69	19.75	19.60%
Total exports under SAFTA		101.64	72.78	92.67	168.29	100.76	100.00%

**Sri Lanka's Major Exports to India under SAFTA (USD Mn.)**
HS Code	Description	2021	2022	2023	2024	2025	Share in 2025 (%)
090411	Pepper: Neither crushed nor ground	72.48	42.52	63.02	132.35	49.24	58.55%
080111	Coconuts: Desiccated	13.64	7.60	11.39	17.05	20.13	23.94%
Other		3.40	5.69	2.15	4.25	14.72	17.51%
Total Exports to India under SAFTA		89.52	55.81	76.56	153.65	84.09	100.00%

**Sri Lanka's Major Imports under SAFTA (Value in US$ Mn.)**
HS Code	Description	2021	2022	2023	2024	2025	Share in 2025 (%)
841810	Refrigerators, freezers and other refrigerating or freezing equipment, electric or other; heat pumps other than air conditioning machines	3.60	0.71	1.62	4.09	7.93	51.50%
030695	Crustaceans, whether in shell or not, live, fresh, chilled, frozen, dried, salted or in brine; smoked crustaceans, whether in shell or not, whether or not cooked	0.73	0.87	0.98	1.05	1.09	7.05%
Other imports		3.32	3.45	2.75	5.59	6.38	41.45%
Total imports under SAFTA		7.65	5.04	5.36	10.73	15.40	100.00%