India is Sri Lanka’s largest trading partner globally, while Sri Lanka is India’s second largest trading partner in the SAARC. It is the number one source of supplies accounting for twenty percent of Sri Lanka’s total imports and third largest export destination for Sri Lankan products absorbing six percent of total exports. Among tourists, Indian visitors make the largest single group having a share of twenty seven percent of total arrivals. In the investment field, India is among the top five foreign investors in Sri Lanka. Trade between Sri Lanka and India has grown rapidly after the entry into force of the Indo-Sri Lanka Free Trade Agreement in March 2000. The value of bilateral trade increased fromUS$658 million in 2000 to US$ 3.6 billion in 2013.

Sri Lanka’s exports growth has largely been under the ISFTA, whereas India’s exports have remained mostly outside the ISFTA. In average, over 70% of Sri Lanka’s exports to India continue to be under the ISFTA, while India’s exports to Sri Lanka under the ISFTA remains only around 25%. Sri Lanka could export more than 4000 product lines to the Indian market on duty free basis. The noteworthy aspect of the growth of exports under the agreement is the broader product diversification, which took place following the FTA.

Major exports from Sri Lanka under the ISFTA includes; apparel, furniture, MDF boards, glass bottles, processed meat products, poultry feed, insulated wires & cables, bottle coolers, pneumatic tires,  tiles & ceramics products, rubber gloves, electrical panel boards & enclosures, machinery parts, food preparations and spices etc.

 Table – 1: Trade between India and Sri Lanka : 2000 – 2013  (Values in US $ Millions)

Source: Sri Lanka Customs

Table -2: Major Exports to India in 2013                                                      

Source: Sri Lanka Customs

Table – 3: Major imports from India in 2013

Source: Sri Lanka Customs