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Integration of Sri Lanka into Indian Supply Chains under the Bilateral Free Trade Agreement

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  • Sirimal Abeyratne

Abstract

The purpose of this article is to examine the role of Indo-Lanka Free Trade Agreement (FTA) in integration of Sri Lanka into the Indian manufacturing processes in line with emerging trade patterns based on ‘global product sharing’. While Sri Lanka has established close economic ties with India in general, the FTA (2000) has led to a ‘zero’-tariff regime covering a bulk of their bilateral trade. However, there is no evidence to support the popular perceptions about the deeper integration of Sri Lanka into Indian supply chains. While the expansion of Sri Lanka’s trade with India under the FTA has revealed peculiar outcomes, the ‘old-style’ trade integration between the two countries has remained virtually unchanged. Trade and growth patterns in both Sri Lanka and India are different from the experience of East and South-east Asian countries which created opportunities to accommodate globalized supply chains of fragmented manufacturing processes.

Suggested Citation

  • Sirimal Abeyratne, 2013. "Integration of Sri Lanka into Indian Supply Chains under the Bilateral Free Trade Agreement," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 14(2), pages 275-292, September.
    • Handle: RePEc:sae:soueco:v:14:y:2013:i:2:p:275-292
    DOI: 10.1177/1391561413500176
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    References listed on IDEAS

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    1. Prema-chandra Athukorala, 2012. "Sri Lanka’s Trade Policy: Reverting to Dirigisme?," The World Economy, Wiley Blackwell, vol. 35(12), pages 1662-1686, December.
    2. Sirimal Abeyratne, 2012. "Sri Lanka’s Free Trade Agreements with India and Pakistan: Are They Leading Bilateral Trade Beyond Normalcy?," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 17(Special E), pages 315-337, September.
    3. Prema-chandra Athukorala & Jayant Menon, 2010. "Global Production Sharing, Trade Patterns and Determinants of Trade Flows," Departmental Working Papers 2010-06, The Australian National University, Arndt-Corden Department of Economics.
    4. Athukorala, Prema–Chandra & Menon, Jayant, 2010. "Global Production Sharing, Trade Patterns, and Determinants of Trade Flows in East Asia," Working Papers on Regional Economic Integration 41, Asian Development Bank.
    5. Fukunari KIMURA, 2006. "International Production and Distribution Networks in East Asia: Eighteen Facts, Mechanics, and Policy Implications," Asian Economic Policy Review, Japan Center for Economic Research, vol. 1(2), pages 326-344, December.
    6. Ferrarini, Benno, 2011. "Mapping Vertical Trade," ADB Economics Working Paper Series 263, Asian Development Bank.
    7. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    8. Prema-chandra Athukorala, 2011. "Production Networks and Trade Patterns in East Asia: Regionalization or Globalization?," Asian Economic Papers, MIT Press, vol. 10(1), pages 65-95, Winter/Sp.
    9. Saman Kelegama & Indra Nath Mukherji, 2007. "India-Sri Lanka Bilateral Free Trade Agreement : Six Years Performance and Beyond," Trade Working Papers 22104, East Asian Bureau of Economic Research.
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    Cited by:

    1. Saman Kelegama, 2015. "The India–Sri Lanka Free Trade Agreement and the Proposed Comprehensive Economic Partnership Agreement: A Closer Look," Working Papers id:6597, eSocialSciences.

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    More about this item

    Keywords

    Bilateral trade; trade agreements; network trade; Sri Lanka;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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