India and Sri Lanka have created a conducive legal framework to take forward bilateral trade and look forward to greater economic engagement through economic and trade cooperation, International Trade and Relations Committee Chairman of Hyderabad and Andra Pradesh Federation of Chambers of Commerce and Industry member Sri Nivas Ayyadevara told the inaugural session of a trade seminar held at the Federation of Chambers of Commerce Sri Lanka yesterday.

He said this could be done through bilateral free trade agreement, a double taxation avoidance agreement, and cooperation in areas of small scale industries, agriculture, tourism space and information technologies, and air travel.

The Free Trade Agreement promoted a 257 per cent increase in the bilateral trade between 2001 and 2004. Two-way trade exceeds USD 1.7 billion in 2004 and rose to USD 2.025 billion in 2005, he said.

India is the third largest destination for Sri Lankan exports and the fourth largest investor in Sri Lanka. It exports a variety of goods and services to Sri Lanka including transport equipment, cotton yarn, fabrics, iron and steel. India imports non-ferrous metals such as copper and spices electronic goods, paper pulp and chemicals from Sri Lanka.

However, in terms of total quantum, bilateral trade remains modest but it shall grow, he said. Without doubt the free trade agreement is a landmark event in the economic integration of India and Sri Lanka ,but yet lot more needs to be done, he said.

Ayyadevara said about one sixth of the total development credit granted by the Indian Government is made available to Sri Lanka for the purchase of capital goods, consumer durables, consultancy services, food items and petroleum products.

Another line of credit was available to Sri Lanka for post-tsunami rehabilitation of the coastal railway line.

The delegation of 21 managing committee members of the Andra Pradesh Federation of Chambers of Commerce and Industry led by Ayyadevara educated the FCCISL members on FAPCCI and trade opportunities in Andra Pradesh enabling to start joint ventures.