The South Asian Free Trade Area (SAFTA) agreement is a regional initiative aimed at promoting trade cooperation among the South Asian countries. India and Sri Lanka, being key players in the region, signed the agreement in 2000 to reduce barriers to trade and facilitate economic growth.
Under the SAFTA agreement, both countries have committed to eliminating tariffs on a range of goods traded between them over a period of time. The agreement covers goods, services, and investment, and contains provisions for cooperation in various sectors including agriculture, textiles, and electronics.
India and Sri Lanka have a long history of economic ties, with India being one of the major trading partners for Sri Lanka. The SAFTA agreement has helped to strengthen this relationship by increasing the volume of trade between the two nations. It has also facilitated the transfer of technology, knowledge, and skills, which has helped to enhance the competitiveness of the domestic industry in both countries.
The agreement has provided several benefits to businesses in India and Sri Lanka. By eliminating tariffs, the costs of importing and exporting goods have reduced, making it easier for businesses to trade with each other. This has also led to greater competition, which has encouraged businesses to improve their products and services.
However, the agreement has faced some challenges, particularly in terms of non-tariff barriers such as restrictions on trade and customs procedures. These issues have hindered the smooth implementation of the agreement and have caused delays in the trade process.
Despite these challenges, the SAFTA agreement remains a cornerstone of the economic relationship between India and Sri Lanka. It has helped to increase trade volume and enhance economic growth in both countries. As the two nations explore opportunities for further cooperation, the SAFTA agreement will continue to play a significant role in facilitating trade and promoting economic development.