Sri Lanka is preparing to renegotiate all four of its existing free trade agreements (FTAs), including the India-Sri Lanka Free Trade Agreement, in an effort to secure terms that are more favourable to the country, a senior government official said.
The proposal to renegotiate the agreements with India, Pakistan, Thailand and Singapore is expected to be presented to Cabinet shortly, following a review conducted by a committee appointed by the Cabinet specifically to examine the existing trade arrangements.
“The committee has handed over its report, and it gives the pros and cons of the agreements in place. Hence there is scope to improve them, so they work in favour of the country than they do now,” the official said.
The proposed changes come as Sri Lanka and India prepare to begin discussions on updating their bilateral trade agreement. During the recent visit to Sri Lanka by India’s Foreign Secretary Vikram Misri, the two countries agreed to establish a new joint Working Group to negotiate an update to the India-Sri Lanka FTA, which was signed in 1998 and became operational in March 2000.
Both sides are expected to name members to the Working Group shortly, with negotiations expected to commence thereafter. The Sri Lankan government believes the discussions could provide an opportunity to secure improved trading conditions.
“We believe India will be flexible in the negotiations on the FTA so that Sri Lanka can gain more favourable conditions in trade,” the official said.
The government’s broader review reflects its view that some provisions of the existing agreements have become outdated. The official said the FTAs needed to be renegotiated in some areas, with new agreements eventually signed to reflect current economic and trade conditions.
Sri Lanka’s agreement with Pakistan was signed in August 2002 and came into operation in June 2005. The Singapore agreement was signed and came into force in 2018, while the agreement with Thailand was signed in 2024.
The government’s proposed renegotiation would therefore cover four agreements that differ significantly in age and scope, but which officials believe could be improved to deliver greater benefits for Sri Lanka.
The move also comes within a wider network of trade arrangements involving Sri Lanka. In addition to its bilateral FTAs, the country is party to the SAARC Preferential Trading Arrangement (SAPTA), the South Asian Free Trade Area (SAFTA), the Asia-Pacific Trade Agreement (APTA), and the Global System of Trade Preference (GSTP).
Sri Lanka also has access to the UK’s new Developing Countries Trading Scheme (DCTS), adding another component to the country’s broader trade framework.
The immediate focus, however, is expected to be on the four existing FTAs and particularly the agreement with India. The establishment of the joint Working Group signals the beginning of a process aimed at updating an agreement that has governed bilateral trade between the two countries since March 2000.
For Sri Lanka, the government’s position is that renegotiation should produce arrangements that work more favourably for the country. The Cabinet will now consider the proposal based on the findings of the committee that reviewed the existing agreements.
