Sri Lanka, India trade deal seen containing deficit

August 04, 2012 (LBO) - A free trade deal between India and Sri Lanka has actually helped stabilise the island's trade deficit with her larger neighbour, a senior economist has said. Concerns among Sri Lankan protectionist forces about the Indo-Lanka free trade agreement, that it was lopsided and favoured India, were largely misplaced, said Saman Kelegama, executive director of the Institute of Policy Studies, a think-tank.

"The FTA alone cannot be blamed for the lop sided trade," he told a seminar on bilateral trade held alongside the 'India Show' trade exhibition and investment forum that began in Colombo Friday.

"The imbalance would have been greater if the FTA was not there."

The forum, organised by the Confederation of Indian Industry in partnership with the Ceylon Chamber of Commerce from 3-5 August, 2012, aims to encourage trade and investment between the two countries.

Bilateral trade between Sri Lanka and India reached almost five billion US dollars in 2011 with India buying about 500 million US dollars of Sri Lankan goods and Sri Lanka buying the rest from India.

India’s exports to Sri Lanka have been rising faster than Sri Lanka's exports to Indi