Speaking to CNBC-TV18, Balendra said the current uncertain environment could be the ideal moment to revive discussions around an Economic and Technology Cooperation Agreement (ETCA), leveraging the strong foundation built by the Indo-Lanka FTA, which has been in force since 2000 and has driven bilateral trade beyond $6 billion.
Adding further momentum to this partnership was Prime Minister Narendra Modi’s recent visit to Sri Lanka, hailed as a major milestone in the long-standing relationship between the two countries.
Duminda Hulangamuwa, Chairman of the Ceylon Chamber of Commerce, underlined India’s enduring status as Sri Lanka’s largest trading partner, with substantial investments in oil, banking, construction, and infrastructure.
“There is a strong Indian presence in Sri Lanka,” he said. “Prime Minister Modi’s visit will enhance the investments we already have and elevate bilateral trade to a new level.”
Energy cooperation has emerged as a key pillar of the engagement, with both sides agreeing to jointly develop Trincomalee as a regional energy hub—in collaboration with the UAE—and to establish electricity grid interconnection between India and Sri Lanka. Hulangamuwa noted that these moves could “significantly boost the investment climate,” allowing for cross-border electricity trade and positioning Sri Lanka as a key player in the region’s energy ecosystem.
The visit also marked a defence milestone, with the signing of the first-ever Memorandum of Understanding (MoU) on defence cooperation between India and Sri Lanka. This agreement lays the groundwork for enhanced military collaboration, including joint exercises, high-level exchanges, increased port calls, and potential partnerships in defence manufacturing.
However, the imposition of new US trade tariffs casts a shadow over global exports, posing fresh challenges to both India and Sri Lanka. Balendra acknowledged the potential “material impact” of these duties, especially for sectors reliant on the US market.
Yet, he stressed the silver lining. “It’s also an opportunity for countries like India and Sri Lanka to forge closer trading ties,” he said, advocating for a revival of talks for a broader economic pact like ETCA—to drive bilateral trade to new heights, beyond the successes of the original FTA.
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