India and Sri Lanka have had a long-standing relationship, with both countries sharing a rich cultural heritage and a history of trade and commerce. In recent years, the two nations have been working towards strengthening their economic ties, with the signing of a Free Trade Agreement (FTA) between India and Sri Lanka being one of the most significant developments in this regard.

The India-Sri Lanka Free Trade Agreement was signed in 1998 and came into effect in 2000. The agreement seeks to eliminate tariffs on goods traded between the two countries and to increase the volume of trade between the two nations. The FTA covers a wide range of products, including textiles, pharmaceuticals, chemicals, and agricultural products.

The signing of the FTA has had a significant impact on trade relations between India and Sri Lanka. The agreement has led to an increase in the volume of trade between the two countries, with India exporting more goods to Sri Lanka than ever before. In 2019-20, India`s exports to Sri Lanka amounted to $3.6 billion, making it India`s fourth-largest trading partner in the region.

The FTA has also helped to reduce the cost of doing business between the two countries. The elimination of tariffs on goods has made it easier for businesses to trade between India and Sri Lanka. This has led to an increase in investment in both countries, with Indian companies investing in Sri Lanka and Sri Lankan companies investing in India.

Despite the many benefits of the FTA, there have been some challenges and criticisms. Some have argued that the agreement has led to an increase in the trade deficit between the two countries, with India importing more goods from Sri Lanka than it exports. Others have pointed to issues with non-tariff barriers, such as sanitary and phytosanitary measures, that have made it difficult for businesses to trade with each other.

To address these challenges, India and Sri Lanka have been working towards a review of the FTA. The two nations have established a joint committee to review the agreement and to address any issues that may have arisen. This review is expected to lead to a strengthening of the FTA, which will benefit both countries and their economies.

In conclusion, the India-Sri Lanka Free Trade Agreement is a significant development in the economic relationship between the two countries. While there have been some challenges and criticisms, the overall impact of the FTA has been positive, with an increase in the volume of trade and investment between India and Sri Lanka. With the ongoing review of the agreement, it is expected that the FTA will continue to strengthen and benefit both nations in the years to come.