This would be the first such agreement India would be signing with a SAARC member country, although it has signed such a pact earlier with Singapore in 2005 and is holding talks with the European Union (EU), Japan and South Korea for other such arrangements. Prime Minister Manmohan Singh would represent India at the SAARC Summit. The agreement is expected to considerably boost the economic engagement between India and Sri Lanka which already have a Free Trade Agreement (FTA) sucessfully in operation.
The FTA, signed in 1999, has resulted in an upswing in the volume of trade from Sri Lanka to India from 49 million US dollars to 516 million US dollars and from India to Sri Lanka from 549 million US dollars to 2.7 billion US dollars between 1999 and 2007.
A senior official said that after signing, the agreement would cover trade in the areas of goods, services, education and custom cooperation between the two countries and would be operational in three years.
The official said the two countries have already finalised the draft agreement during the two-day talks between experts of the both the countries in Sri Lanka last week, after 12 rounds of deliberations. Following the signing of the agreement, bilateral trade in goods and services is expected to rise from 516 million US dollars to 1.5 billion US dollars by the time CEPA is fully operationalised in 2012.
The CEPA, which is an update on the FTA, would cover a whole range of services and the investment sector, while the FTA is confined only to trading in goods. Moreover, the CEPA would be subject to a review every six months by senior officials of the two countries and every year by ministers.
With the operationalisation of the CEPA, India would have a negative list of 345 goods and services in a basket of 5,211, while Sri Lanka would remove 32 more items from its negative list of 1,180 from India.
Indian exports to Sri Lanka include petroleum products and transport equipment, while imports from Sri Lanka are tea, coffee, edible oil, spices and electrical equipment.