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India-Sri Lanka FTA: A closer look at garment industry dynamics

India has sought concessions on customs duties for various goods, including cars, commercial vehicles, and machinery from Sri Lanka. While the initial FTA covered goods, the two countries are now negotiating to expand the agreement to include additional goods and services. As of ****, the agreement stipulates that garments classified under Chapters ** and **, while still on the negative list, will benefit from a ** per cent tariff concession for *** products, with an annual quota of eight million pieces allowed at zero duty. This concession aims to facilitate increased exports of Sri Lankan apparel to India.

Sri Lanka has expressed a strong interest in enhancing its market presence in India, given that apparel is a significant source of export revenue. The country&#**;s main markets, the US and the UK, have experienced a decline in demand, reducing their share of Sri Lanka&#**;s export market to ** per cent due to decreased spending on discretionary items like textiles and garments. Consequently, India remains a crucial partner for Sri Lanka, particularly due to the logistical advantages provided by proximity to the ports of Mumbai and Chennai. This is especially pertinent considering Sri Lanka&#**;s economic crisis of ****, which has exacerbated resource limitations.