The recently signed free trade agreement (FTA) between India and Sri Lanka has generated a lot of buzz in the business world. The FTA aims to increase bilateral trade between the two nations and offer more favorable trading conditions for businesses on both ends. In this article, we will take a closer look at the agreement, its potential benefits, and what it means for businesses.

The FTA was signed on 21st December 2020 and is expected to come into effect from April 2021. The agreement covers a wide range of products and services, including trade in goods, trade in services, investments, and economic cooperation. Under the agreement, Sri Lanka has committed to eliminating tariffs on 408 products exported from India, while India has agreed to eliminate tariffs on 142 items from Sri Lanka.

One of the key benefits of the FTA is the reduction in trade barriers, which will make it easier and cheaper for businesses to trade with each other. The FTA is expected to facilitate significant growth in trade volumes between the two nations, which currently stands at around $6 billion. The agreement is also expected to create new opportunities for businesses, particularly in areas such as services, IT, textiles, and agriculture.

For Indian businesses, the FTA presents a significant opportunity to expand their presence in Sri Lanka, which is a rapidly growing market with a population of over 21 million. The agreement will also allow businesses to tap into Sri Lanka`s strategic location, which is at the crossroads of major trade routes between Asia, Europe, and Africa. This will enable Indian businesses to access new markets and increase their global competitiveness.

Sri Lankan businesses, on the other hand, will benefit from increased access to the Indian market, which is one of the fastest-growing economies in the world. The agreement will allow Sri Lankan businesses to export their products to India with lower tariffs, making them more competitive in the Indian market. This is particularly important for Sri Lanka`s textile and apparel sector, which is a significant contributor to the country`s economy.

In conclusion, the free trade agreement between India and Sri Lanka presents significant opportunities for businesses on both ends. The agreement will help to reduce trade barriers, create new opportunities, and facilitate growth in trade volumes between the two nations. Businesses that take advantage of the FTA are likely to benefit from increased access to new markets, increased competitiveness, and improved profitability.