The main argument that arises by many people in Sri Lanka is that India restricting Sri Lankan exports through non- tariff barriers. According to Moramudali (2015), India has imposed a minimum floor price (the US $ 80) was imposed on 26th august 2013. Also, the article mentioned that excessive time has taken for lab testing for fresh fruits and highly perishable items. Our apparel exports are being on a Quota restriction. Also, Sri Lankan Tea and Frozen meat items have gone under a long delay due to complex testing procedures and delayed product licensing system. Some of Sri Lankan products had faced to port restrictions in India like CU wires/cables.
“Following the surge of Vanaspati imports from Sri Lanka to India, the two countries entered into negotiations in 2006 to apply a quota on Vanaspati exports due to the disruptions caused to the Indian domestic industry. The two countries initially agreed to a quota of 250,000 metric tons per year. However, in 2006, India unilaterally reduced this quota to 100,000 metric tons and canalized all Vanaspati imports from Sri Lanka through national procurement agency”(Kelegama, 2014).
According to Quotation made by Dr.Kelegama, there was a quota restriction on our exports to India.
To reap out the gains from IFTA Sri Lankan manufacturers should take advantage of Indian supply chains. But further analysis says that our manufacturers have not been linked with Indian supply chains. Also, when comparing two countries, there is a competitive trading structure prevailed in both countries. Both countries are labor-intensive countries. Both compete in the world apparel market. Having such a competitive trading structure does not guarantee that countries can gain from FTA. First of all, Sri Lanka needs to have a comprehensive self-analysis to find what are the final products that can discover low-cost inputs from the Indian market. With cheap input, providers enable to generate high value-added final products (Kelegama, S. (2014) ‘Asian Development Bank Institute’, (458)).
