For nearly 15 years, Sri Lanka has debated, postponed and politicised a trade agreement that many economists believe could reshape the country’s economic future. As India cements its position as one of the world’s fastest-growing major economies, questions are mounting over whether Sri Lanka’s prolonged hesitation over the proposed Economic and Technology Cooperation Agreement (ETCA) has already cost billions in missed investment and trade opportunities.
Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva believes the answer is yes.
Addressing a forum commemorating the 25th anniversary of the India-Sri Lanka Free Trade Agreement (ISFTA), Dr. de Silva argued that while neighbouring countries have aggressively pursued economic partnerships with India, Sri Lanka remains trapped in decades-old trade arrangements that no longer reflect the realities of global commerce.
According to him, India has signed multiple modern trade agreements while Sri Lanka continues to rely on the ISFTA, which was designed primarily to reduce tariffs rather than integrate industries into regional production networks.
The consequences, he suggested, are becoming increasingly evident.
As multinational manufacturers diversify their supply chains across Asia, countries with stronger economic integration have attracted greater foreign direct investment and export-oriented industries. Sri Lanka, however, has struggled to secure similar opportunities despite its close proximity to India’s booming southern states.
Dr. de Silva pointed to Tamil Nadu, Karnataka, Andhra Pradesh and Telangana some of India’s fastest-growing industrial hubs as markets located just across the Palk Strait. Yet Sri Lankan businesses remain largely disconnected from these expanding manufacturing ecosystems.
The MP argued that the proposed ETCA was never simply about increasing imports or reducing tariffs. Instead, its primary objective is to allow Sri Lankan companies to become suppliers within India’s vast manufacturing chains while encouraging greater Indian investment into local industries.
However, political opposition and misinformation have repeatedly stalled negotiations.
Successive governments have faced resistance from groups concerned that opening parts of Sri Lanka’s services sector could threaten local professionals and employment. While acknowledging these concerns, Dr. de Silva maintained that the debate has often overlooked the possibility of introducing safeguards, regulatory controls and professional accreditation systems capable of protecting domestic workers while still encouraging investment.
Beyond political disagreements, practical trade barriers continue to frustrate exporters. Sri Lankan businesses frequently encounter certification delays, product testing requirements and logistical bottlenecks that reduce the benefits of the existing free trade agreement. Dr. de Silva argued that these non-tariff barriers must be addressed alongside any future economic partnership.
He also questioned why ETCA has largely disappeared from recent high-level discussions between Colombo and New Delhi despite frequent diplomatic engagements. The absence of clear political direction, he warned, risks further delaying a deal that many believe is essential for long-term economic recovery.
With Sri Lanka seeking sustainable growth after years of economic turmoil, the debate surrounding ETCA is once again returning to the national agenda. Dr. de Silva insisted that the country can no longer depend solely on its limited domestic market and must instead position itself within South Asia’s rapidly expanding economic landscape.
Whether Sri Lanka finally moves beyond years of indecision may ultimately determine whether it becomes a participant in the region’s next phase of economic growth or watches it unfold from the sidelines.
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