India –Sri Lanka Economic and Technology Cooperation Agreement (ETCA) will be signed by the end of this year, according to Prime Minister Ranil Wickremesinghe.
Addressing the India Economic Summit organized by the World Economic Forum (WEF), in New Delhi on Oct 6, Wickremesinghe said, the ministers on the two sides are currently working on it. “”Prime Minister Modi and I decided we must conclude it by end of this year”
He pointed out that ETCA offers a strategic economic advantage to Sri Lanka and to the five fastest growing southern Indian states. “These five southern Indian states Karnataka, Andhra, Tamil Nadu, Kerala and Telangana have a population of 250 million people and a combined GDP of US$ 450 million. With the addition of Sri Lanka’s 22 million at US$ 80 billion economy, the GDP in this sub- regional economy will cross US$ 500 billion,” the visiting Premier said.
He added that along with the free trade agreement between Sri Lanka and Singapore, the Comprehensive Economic Partnership Agreement (CEPA) between India and Singapore and the ETCA between India and Sri Lanka will establish a tripartite agreement for trade and investments.
Small domestic markets are insufficient to sustain growth. Therefore shift to greater export orientation is required to achieve a growth of 8%. Hence our trade policy will focus on gaining access into the large markets, he explained.
CHINA AND BEYOND
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. There is none and we have told that very clearly to the Chinese. The Chinese have agreed,” Mr. Wickremesinghe asserted.
He also took a dig at the developed world and said that Asia’s fast growing economies can bail out the world economy. “The rules of globalization were written by the West and the Empire. 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 observed.
“Asia will bail the world out, if we are allowed to write the rules. Otherwise we create our own system and deliver (on making our people happy) by building our own markets,” Mr. Wickremesinghe remarked.
Speaking about Sri Lanka’s economic policy, the PM said the better performing Asian economies allow Sri Lanka with space to carry out major reforms.
He said Sri Lanka will carry out reforms for macroeconomic stabilization which is based on fiscal consolidation and increase of tax revenue, which is expected to reduce the budget deficit to 3.5% by 2020. The stabilization program will be accompanied by the measures to restructure the economy which include the exchange rate flexibility, and trade liberalization to make Sri Lanka a platform for value addition.
“We are also liberalizing the tariff and the non-tariff barriers that are denying the enterprises the opportunity of getting access to the latest technology and know-how and deprive our consumers of the best quality of goods and services.”
“We also want to take measures to see a rapid improvement in ease of doing business by the early part of 2018.” the PM said adding that maximizing on these factors will transform Sri Lanka into a geo-economic center in South Asia, dynamically and synergically engaged with the rest of the region.
OIL-GAS INFRA
India has offered to work with the Government of Sri Lanka in developing gas infrastructure in the island nation and help it to push ahead with its clean fuel campaign.
The offer was made when Sri Lankan Petroleum Minister Chandima Weerakkody met his Indian counterpart, Dharmendra Pradhan in New Delhi on Oct 6.
Both the sides also discussed refurbishment of Sapugaskanda refinery and possibility of setting up of a refinery in Sri Lanka as a joint venture to address the local needs. India also offered to assist in building oil and gas pipeline networks in Sri Lanka. Pradhan expressed India’s commitment to develop Trincomalee as a regional energy hub.
While on exploration and production activities in Mannar basin, Pradhan said that ONGC Videsh Ltd (OVL) and its parent company ONGC had the expertise and knowledge of the geological conditions that exist in the Cauvery basin. He said that these conditions are similar to Mannar basin and, hence, OVL could be a natural partner in carrying out E&P activities in this area.
Joint development of Upper Tank Farm by Lanka IOC (LIOC) in Trincomalee, setting up of LNG terminal at Kerawalapitiya, near Colombo by Petronet LNG Ltd, setting up of City Gas Distribution network by GAIL and use of CNG in the automotive sector are among the other Indian proposals.
Pradhan told his guest that the Indian companies had engaged a reputed consultant for assessing LNG demand and are developing related infrastructure in Sri Lanka. The report would be shared with Sri Lanka shortly.
India’s gas based business and infrastructure is only 20 year old but it has the requisite experience and expertise in the sector and is ready to share with Sri Lanka.
The two minister also discussed LIOC activities in Sri Lanka, including increasing the number of its Retail Outlets and bunkering operations and granting license to LIOC for marketing ATF and LPG.
Both the petroleum Ministers discussed on the possibility of creating SAARC Energy Initiative to create sub-regional hydrocarbon infrastructure, particularly gas network, to fuel our economies in a sustainable manner. Cooperation in bio-fuel sector was also discussed, including training of Sri Lankan professionals in India in the sector.