Sri Lanka is the only country to have Free Trade Agreements with both India and Pakistan, giving duty free access to over 1.3 billion consumers from the island.
The Indo-Sri Lanka Free Trade Agreement (ISLFTA), which came into effect in year 2000, provides strategic access from Sri Lanka for over 4,200 products (at zero duty) to India, which is the world’s second most populous market. The Pakistan – Sri Lanka Free Trade Agreement (PSLFTA), which came into effect in year 2005, provides strategic access from Sri Lanka for nearly 4,500 products (duty free from 2008) to the Pakistan market.
Since the agreement was signed bi-lateral trade between Sri Lanka and India have grown more than 5 times and bi-lateral trade between Sri Lanka and Pakistan have grown 3 times.
In order to qualify under the two free trade agreements products need to be wholly produced or have a domestic value addition of 35% value addition FOB level.
In addition, by locating in Sri Lanka, a company can gain preferential trade access to two large regional blocs under the South Asian Free Trade Area (SAFTA) and the Asia–Pacific Trade Agreement (APTA).