India, Sri Lanka eye economic pact

STRENGTHENING TIES: The pact to be signed by Prime Minister Narendra Modi and Sri Lankan PM Ranil Wickremesinghe will focus on services and technology. —Photo: V. Sudershan

STRENGTHENING TIES: The pact to be signed by Prime Minister Narendra Modi and Sri Lankan PM Ranil Wickremesinghe will focus on services and technology. —Photo: V. Sudershan  

Prime Minister Narendra Modi and Sri Lanka Prime Minister Ranil Wickremesinghe will sign an enhanced bilateral economic partnership by the end of this year to allow the free flow of services, investments and technology.

This will be in addition to the existing Free Trade Agreement (FTA) between the two nations.

Mr. Wickremesinghe said that closer economic ties can accelerate growth among India’s five southern States and Sri Lanka and categorically denied there was any military engagement involved in the island nation’s negotiations with China for its ‘One Road, One Belt’ initiative.

“Prime Minister Modi and I decided we must conclude it (the proposed technology and economic co-operation agreement) by the end of this year,” Mr. Wickremesinghe said on Thursday, speaking at the India Economic Summit hosted by the World Economic Forum and CII in the capital. “This offers a strategic economic advantage to our country and the fastest-growing southern Indian States.”

Southern States

Sri Lanka and the five southern States, including Karnataka, Andhra Pradesh and Tamil Nadu, together have a population of 272 million people and a combined gross domestic product of more than $500 billion, Mr. Wickremesinghe said. “These five States, with Sri Lanka, have an economy, whose GDP is equivalent to that of Sweden.”

There is room to grow much faster if the two countries work together, he said.

“We are cognizant that the economic asymmetry between us and India is going to increase in the future, when the latter emerges as a global player in an increasingly multi-polar world,” he said, reasoning out the need to deepen ties.

Sri Lanka suggested the creation of a larger special zone of economic co-operation around the Bay of Bengal to India, which takes on board Singapore, Indonesia and Malaysia in addition to BIMSTEC countries. BIMSTEC stands for Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Co-Operation and its members are Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal.

“Let’s have a whole area around the Bay of Bengal of vibrant economic cooperation and a vibrant one. That’s what we envisage and should work for. The growth is here,” Mr. Wickremesinghe said.

Sri Lanka is negotiating a Free Trade Agreement (FTA) with Singapore, while India already has comprehensive economic partnership pact with the latter, so there is scope for a trilateral arrangement to boost the three economies, he said.

Beyond China

Seeking to allay India’s concerns about the island nation’s ties with China, the Sri Lankan Prime Minister said they are negotiating an FTA with China under its ‘One Belt, One Road’ initiative as it is necessary to make the Chinese investments in the country realise their full potential.

“There’s been a lot of suspicion as to a military element in it,” Mr. Wickremesinghe said. “There is none,” he asserted.

He took a jab at the developed world and said that Asia’s fast growing economies could bail out the world economy.

“The rules of globalization were written by the West and the Empire,” Mr. Wickremesinghe said. “We have only played by it. At the end of the day, it’s not neoliberalism or free-market or anything else that worked,” he said.

“Asia will bail the world out, if we are allowed to write the rules,” Mr. Wickremesinghe said. “Otherwise we create our own system and deliver (on making our people happy) by building our own markets,” he added.

Recommended for you