Unit 1The Agreement

The Indo-Sri Lanka free trade agreement (ISFTA), which was signed on 28 th December 1998 and enter4d into force with effect from 1 march 2000, aims at promoting economic linkage between India and Sri Lanka through enhancement of bilateral trade and investment. The agreement covers only trade in goods and requires the two countries to offer market access for each others exports on duty free basis and concessionary tariffs. The ISFTA does not provide for elimination of non tariff barriers.

Trade liberalization:

Under the ISFTA, India and Sri Lanka have agreed to offer Zero duty for all products except those in their negative lists, during a period of 3 year an 8 years respectively. The shorter time frame given to India and longer time frame given to Sri Lanka for lowering their tariffs for each other exporters have been agreed upon taking into account the asymmetries prevalent between the two economics. Similarly, the negative list of India contains only 433 tariffs lines, while Sri Lanka’s negative list includes over 1200 tariff lines. (The numbers of tariffs lines, listed at 6 digit level. Are based on 2002 HS Transportation)

Rules of Origin :

In order to receive ISFTA benefits, the merchandise exported between India and Sri Lanka should comply with the following rules of origin criteria.

Wholly obtained products :

All wholly obtained products such as tea, fish, spices etc. will be able to enjoy duty free benefits , at each others market without difficulty, provided they are not on the negative list of the respective countries.

Product not wholly produced or obtained:

These include the products manufactured using imported raw materials. In order to enjoy ISFTA benefits, the product should comply with following criteria.

The Domestics value addition (DVA) in the exporting country should not be less than 35 % of FOB value of the finished product and

HS Codes of the imported raw material and the finished products should be different at 4-digit level (change of tariffs heading criteria)

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INTRODUCTION

In recent years there has been upsurge in bilateral free trade agreement (BFTA). As of now there are many as 38 such agreement outside south Asia, the most recent ones being Singapore-Japan and Singapore-new Zealand BFTAs . In addition, several regional grouping have developed bilateral trade linkage with non-members. To illustrate, the European community (EC) Has as many as 28 BFTA with individual member state. Similarly the European free trade area (EFTA) has 12 bilateral trade agreements with member states.

In south Asia also there has been a surge BFTA. India and Bhutan have BFTA since fiftes. A BFTA between India and sri lanka become operational in march 2000. India is currently contemplating similar BFTA with Bangladesh and Maldives. Recently there have been initiatives to establish BFTA between Sri Lanka and Pakistan, Sri Lanka and Bangladesh, Nepal and Sri Lanka, and Nepal and Bangladesh. The recent shift in signing of BFTA has partly been due to the slow and tardy progress under south Asian preferential trading agreement (SAPTA) being negotiated under SAARC.

The commerce secretary of India an finance secretary of Sri Lanka exchanged letters that Operationalise the Indo-Lanka free trade agreement (ILFTA) between India and Sri Lanka signed in new Delhi on December 1998 by H.E. the president of Sri Lanka and the Honorable Prime minister of India with effect from 1st March 2000.

The agreement provide for duty free as well as duty preference access for the goods manufactured in the two countries. Both the countries have listed product for immediate duty free entry into each other’s territories. India has agreed to phase out its tariffs on a large number of items within a period of three years. Sri Lanka will likewise do so in eight years. Both the countries have drawn up negative lists in respect of which no duty concession will apply. These lists include items on which protection to local industry has been considered essential. Both the countries intend to reduce the item in the negative list through periodic consultations.

The agreement sets out the rules the origin criteria for eligibility for preferential access. Products having domestics value addition of 35 % will qualify for preferential market access. Sri Lanka’s export with a domestics value addition 25% will also qualify for entry to the Indian market if they have minimum 10% Indian content.

In respect of a number of sensitive items preferential treatment is accorded with only partial lifting of a quantitative restriction. India will permit the import of Sri Lankan tea to the extent of 15 million kg. Per annum at a fixed tariff preference of 50 %. Under the initial term of the agreement India would permit import of 8 million pieces per annum from Sri Lanka at a fixed tariff preference of 50 %. Out of this, 6 million pieces fabric need to be soured from India. A ceiling of 1.5 million pieces was prescribed for

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individual categories. In respect of textile items, India’s offer is restricted to am maximum of 25%.

The agreement was renegotiated following commerce secretary level talks on 6 th June 2002, joint ministerial committee meeting on 7th June 2002 in New Delhi, followed by senior officials meeting in Colombo from 4th July to 5th July 2002.

Will respect to market access for tea, the Sri Lankan side responding to the request made by Indian side to export Indian teas for home consumption in Sri Lanka stated that it agreed to this request on payment of prevailing MFN duty and subject to an number of quality parameters.

In respect of the request made by Sri Lankan side for more entry ports for tea the Indian side responded positively and offered two more ports (in adding to existing cochin and Kolkata) wit immediate effect, namely, Mumbai on the west coast and Vishakhapatnam on east coast.

With respect to garments, India responded to Sri Lanka’s request depending specific duty concession on 51 tariffs lines at a 6 digit H.S. level. India agreed to increase the specific duty tariffs concession wherever applicable on requested tariff lines from 50% to 75 % however, ad valorem duty concession on these lines would continue at 50 %.

On Sri Lankan request, India agreed to increase the unrestricted quota of 2 million pieces in respect of which fabric of non-Indian origin is used when Sri Lanka fully utilize this quota. On utilization unrestricted quota India agreed to give additional quota of two million pieces out of total 8 million pieces. Further, India agreed to increase the level of quota per category per annum from 1.5 million to 2 million pieces.

Responding to Sri Lanka’s request to have more ports as entry points for garments, India agreed to provide kolkata and JNPT (Mumbai) as additional ports.

On India’s request for an increase in the margin of preference (MOP) to 50% in respect of the imports of bulk cement from India from the present level of 20 %, the Sri Lankan side agreed to increase to MOP to 35 %

The ILFTA between India and Sri Lanka is a landmark in the bilateral relation between the two countries. It is expected to bring about enhanced trade between the two countries as well as to expanded and diversified cooperation in range of economic sphere, including investment. This is the first such agreement in the south Asian region which could serve as a model for similar bilateral agreement in the region. It has an institutional framework in the form of the Indo-Lanka joint commission, a dispute settlement mechanism and so forth. Its significance further lies in that it can be implemented more expeditiously and also more flexibility, unlike the protracted nature of negotiatio9ns generally associated with multilateral arrangement.

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1.2 PROFILE

OFFICIAL NAME:

Republic of India

Geography Area: 3.29 million sq. km. (1.27 million sq. mi.); about one-third the size of the U.S.Cities: Capital--New Delhi (pop. 12.8 million, 2001 census). Other major cities--Mumbai, formerly Bombay (16.4 million); Kolkata, formerly Calcutta (13.2 million); Chennai, formerly Madras (6.4 million); Bangalore (5.7 million); Hyderabad (5.5 million); Ahmedabad (5 million); Pune (4 million). Terrain: Varies from Himalayas to flat river valleys and deserts in the west.Climate: Alpine to temperate to subtropical monsoon.

PeopleNationality: Noun and adjective--Indian(s). Population (2007): 1.14 billion; urban 27.8%.Annual growth rate: 1.3%Density: 324/sq. km.Ethnic groups: Indo-Aryan 72%, Dravidian 25%, others 3%. While the national census does not recognize racial or ethnic groups, it is estimated that there are more than 2,000 ethnic groups in India. Religions: Hindu 81.4%, Muslim 12.4%, Christian 2.3%, Sikh 1.9%, other groups including Buddhist, Jain, Parsi within 1%.Languages: Hindi, English, and 16 other official languages. Education: Years compulsory--none. Literacy — 64.84%.Health: Infant mortality rate--34.61/1,000. Life expectancy--68.59 years (2007 est.).Work force (est.): 450 million. Agriculture--60%; industry and commerce--18%; services and government--22%

Government Type: Federal republic.Independence: August 15, 1947.Constitution: January 26, 1950.Branches: Executive--president (chief of state), prime minister (head of government), Council of Ministers (cabinet). Legislative--bicameral parliament (Rajya Sabha or Council of States, and Lok Sabha or House of the People). Judicial --Supreme Court.Political parties: Indian National Congress (INC), Bharatiya Janata Party (BJP), Communist Party of India-Marxist, and numerous regional and small national parties. Political subdivisions: 28 states,* 7 union territories (including National Capital Territory of Delhi). Suffrage: Universal over 18.

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Economy GDP (FY 2007): $1 trillion ($1,000 billion).Real growth rate (2006-2007 est.): 9.4%.Per capita GDP (FY 2006-2007): $909.Natural resources: Coal, iron ore, manganese, mica, bauxite, chromite, thorium, limestone, barite, titanium ore, diamonds, crude oil.Agriculture: 18% of GDP. Products--wheat, rice, coarse grains, oilseeds, sugar, cotton, jute, teaIndustry: 27% of GDP. Products--textiles, jute, processed food, steel, machinery, transport equipment, cement, aluminum, fertilizers, mining, petroleum, chemicals, and computer software.Services and transportation: 55% of GDP.Trade: Exports (FY 2006-2007)--$127 billion; engineering goods, petroleum products, precious stones, cotton apparel and fabrics, gems and jewelry, handicrafts, tea. Software exports--$22 billion. Imports (FY 2006-2007)--$192 billion; petroleum, machinery and transport equipment, electronic goods, edible oils, fertilizers, chemicals, gold, textiles, iron and steel. Major trade partners--U.S., China, EU, Russia, Japan.

PEOPLEAlthough India occupies only 2.4% of the world's land area, it supports over 15% of the world's population. Only China has a larger population. India's median age is 25, one of the youngest among large economies. About 70% live in more than 550,000 villages, and the remainder in more than 200 towns and cities. Over the thousands of years of its history, India has been invaded from the Iranian plateau, Central Asia, Arabia, Afghanistan, and the West; Indian people and culture have absorbed and modified these influences to produce a remarkable racial and cultural synthesis.

Religion, caste, and language are major determinants of social and political organization in India today. However, with more job opportunities in the private sector and better chances of upward social mobility, India has begun a quiet social transformation in this area. The government has recognized 18 official languages; Hindi, the national language, is the most widely spoken, although English is a national lingua franca. Although 81% of its people are Hindu, India also is the home of more than 138 million Muslims--one of the world's largest Muslim populations. The population also includes Christians, Sikhs, Jains, Buddhists, and Parsis.

The Hindu caste system reflects Indian occupational and socially defined hierarchies. Ancient Sanskrit sources divide society into four major categories, priests (Brahmin), warriors (Kshatriya), traders/artisans (Vaishya) and farmers/laborers (Shudra). Although these categories are understood throughout India, they describe reality only in the most general terms. They omit, for example, the tribal people and those outside the caste system formerly known as "untouchables”, or dalits. In reality, Indian society is divided into thousands of jatis--local, endogamous groups based on occupation--and organized hierarchically according to complex ideas of purity and pollution. Discrimination based on caste is officially illegal, but remains prevalent, especially in rural areas. Nevertheless, the government has made strong efforts to minimize the importance of caste through

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active affirmative action and social policies. Moreover, caste is often diluted if not subsumed in the economically prosperous and heterogeneous cities, where an increasing percentage of India's population lives. In the countryside, expanding education, land reform and economic opportunity through access to information, communication, transport, and credit are helping to lessen the harshest elements of the caste system.

HISTORY The people of India have had a continuous civilization since 2500 B.C., when the inhabitants of the Indus River valley developed an urban culture based on commerce and sustained by agricultural trade. This civilization declined around 1500 B.C., probably due to ecological changes.

During the second millennium B.C., pastoral, Aryan-speaking tribes migrated from the northwest into the subcontinent, settled in the middle Ganges River valley, and adapted to antecedent cultures.

The political map of ancient and medieval India was made up of myriad kingdoms with fluctuating boundaries. In the 4th and 5th centuries A.D., northern India was unified under the Gupta Dynasty. During this period, known as India's Golden Age, Hindu culture and political administration reached new heights.

Islam spread across the subcontinent over a period of 700 years. In the 10th and 11th centuries, Turks and Afghans invaded India and established sultanates in Delhi. In the early 16th century, Babur, a Turkish-Mongol adventurer and distant relative of Timurlane, established the Mughal Dynasty, which lasted for 200 years. South India followed an independent path, but by the 17th century large areas of South India came under the direct rule or influence of the expanding Mughal Empire. While most of Indian society in its thousands of villages remained untouched by the poltical struggles going on around them, Indian courtly culture evolved into a unique blend of Hindu and Muslim traditions.

The first British outpost in South Asia was established by the English East India Company in 1619 at Surat on the northwestern coast. Later in the century, the Company opened permanent trading stations at Madras (now Chennai), Bombay (now Mumbai), and Calcutta (now Kolkata), each under the protection of native rulers.

The British expanded their influence from these footholds until, by the 1850s, they controlled most of present-day India, Pakistan, Sri Lanka, and Bangladesh. In 1857, an unsuccessful rebellion in north India led by Indian soldiers seeking the restoration of the Mughal Emperor led the British Parliament to transfer political power from the East India Company to the Crown. Great Britain began administering most of India directly and maintained both political and economic control, while controlling the rest through treaties with local rulers.

In the late 1800s, the first steps were taken toward self-government in British India with the appointment of Indian councilors to advise the British Viceroy and the establishment

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of Provincial Councils with Indian members; the British subsequently widened participation in Legislative Councils. Beginning in 1920, Indian leader Mohandas K. Gandhi transformed the Indian National Congress political party into a mass movement to campaign against British colonial rule. The party used both parliamentary and nonviolent resistance and non-cooperation to agitate for independence. During this period, however, millions of Indians served with honor and distinction in the British armed forces, including service in both World Wars and countless other overseas actions in service of the Empire.

With Indians increasingly united in their quest for independence, a war-weary Britain led by Labor Prime Minister Clement Attlee began in earnest to plan for the end of its suzerainty in India. On August 15, 1947, India became a dominion within the Commonwealth, with Jawaharlal Nehru as Prime Minister. Strategic colonial considerations, as well as political tensions between Hindus and Muslims, led the British to partition British India into two separate states: India, with a Hindu majority; and Pakistan, which consisted of two "wings," East and West Pakistan--currently Bangladesh and Pakistan--with Muslim majorities. India became a republic, but chose to continue as a member of the British Commonwealth, after promulgating its Constitution on January 26, 1950.

After independence, the Indian National Congress, the party of Mohandas K. Gandhi and Jawaharlal Nehru, ruled India under the leadership first of Nehru and then his daughter (Indira Gandhi) and grandson (Rajiv Gandhi), with the exception of brief periods in the 1970s and 1980s, during a short period in 1996, and the period from 1998-2004, when a coalition led by the Bharatiya Janata Party governed.

Prime Minister Nehru governed the nation until his death in May 1964. Nehru was succeeded by Lal Bahadur Shastri, who also died in office in January 1966. In one month, power passed to Nehru's daughter, Indira Gandhi, Prime Minister from 1966 to 1977. In June 1975, beset with deepening political and economic problems, Mrs. Gandhi declared a state of emergency and suspended many civil liberties. Seeking a mandate at the polls for her policies, she called for elections in March 1977, only to be defeated by Morarji Desai, who headed the Janata Party, an amalgam of five opposition parties.

In 1979, Desai's Government crumbled. Charan Singh formed an interim government, which was followed by Mrs. Gandhi's return to power in January 1980. On October 31, 1984, Mrs. Gandhi was assassinated by her Sikh bodyguard, which led to the killings and secret cremations of hundreds of Sikhs by the government. Her son, Rajiv, was chosen by the Congress (I)--for "Indira"--Party to take her place. His Congress government was plagued with allegations of corruption resulting in an early call for national elections in November 1989.

Although Rajiv Gandhi's Congress Party won more seats than any other single party in the 1989 elections, he was unable to form a government with a clear majority. The Janata Dal, a union of opposition parties, then joined with the Hindu-nationalist Bharatiya Janata Party (BJP) on the right and the Communists on the left to form the government. This

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loose coalition collapsed in November 1990, and the Janata Dal, supported by the Congress (I), came to power for a short period, with Chandra Shekhar as Prime Minister. That alliance also collapsed, resulting in national elections in June 1991.

While campaigning in Tamil Nadu on behalf of his Congress (I) party, Rajiv Gandhi was assassinated on May 21, 1991, apparently by Tamil extremists from Sri Lanka, unhappy with India's armed intervention to try to stop the civil war there. In the elections, Congress (I) won 213 parliamentary seats and returned to power at the head of a coalition, under the leadership of P.V. Narasimha Rao. This Congress-led government, which served a full 5-year term, initiated a gradual process of economic liberalization and reform, which opened the Indian economy to global trade and investment. India's domestic politics also took new shape, as the nationalist appeal of the Congress Party gave way to traditional caste, creed, regional, and ethnic alignments, leading to the founding of a plethora of small, regionally based political parties.

The final months of the Rao-led government in the spring of 1996 were marred by several major corruption scandals, which contributed to the worst electoral performance by the Congress Party in its history. The Hindu-nationalist BJP emerged from the May 1996 national elections as the single-largest party in the Lok Sabha but without a parliamentary majority. Under Prime Minister Atal Bihari Vajpayee, the subsequent BJP coalition lasted only 13 days. With all political parties wishing to avoid another round of elections, a 14-party coalition led by the Janata Dal formed a government known as the United Front, under the former Chief Minister of Karnataka, H.D. Deve Gowda. His government collapsed after less than a year, when the Congress Party withdrew its support in March 1997. Inder Kumar Gujral replaced Deve Gowda as the consensus choice for Prime Minister at the head of a 16-party United Front coalition.

In November 1997, the Congress Party again withdrew support from the United Front. In new elections in February 1998, the BJP won the largest number of seats in Parliament--182--but fell far short of a majority. On March 20, 1998, the President approved a BJP-led coalition government with Vajpayee again serving as Prime Minister. On May 11 and 13, 1998, this government conducted a series of underground nuclear tests, spurring U.S. President Clinton to impose economic sanctions on India pursuant to the 1994 Nuclear Proliferation Prevention Act.

In April 1999, the BJP-led coalition government fell apart, leading to fresh elections in September-October. The National Democratic Alliance--a new coalition led by the BJP--won a majority to form the government with Vajpayee a Prime Minister in October 1999. The NDA government was the first coalition in many years to serve a full five year term, providing much-needed political stability.

The Kargil conflict in May-July 1999 and an attack by terrorists on the Indian Parliament in December 2001 led to increased tensions with Pakistan.

Hindu nationalists supportive of the BJP agitated to build a temple on a disputed site in Ayodhya, destroying a 17th century mosque there in December 1992, and sparking

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widespread religious riots in which thousands, mostly Muslims, were killed. In February 2002, 57 Hindu volunteers returning from Ayodhya were burnt alive when their train caught fire. Alleging that the fire was caused by Muslim attackers, anti-Muslim rioters throughout the state of Gujarat killed over 2,000 people and left 100,000 homeless. The Gujarat state government and the police were criticized for failing to stop the violence and in some cases for participating in or encouraging it.

The ruling BJP-led coalition was defeated in a five-stage election held in April and May of 2004, and a Congress-led coalition, known as the United Progressive Alliance (UPA), took power on May 22 with Manmohan Singh as Prime Minister. The UPA's victory was attributed to dissatisfaction among poorer rural voters that the prosperity of the cities had not filtered down to them, and rejection of the BJP's Hindu nationalist agenda.

The Congress-led UPA government has continued many of the BJP's foreign policies, particularly improving relations with the U.S. Prime Minister Singh and President Bush concluded a landmark U.S.-India strategic partnership framework agreement on July 18, 2005. In March 2006, President Bush visited India to further the many initiatives that underlie the new agreement. The strategic partnership is anchored by a historic civil nuclear cooperation initiative and includes cooperation in the fields of space, high-technology commerce, health issues, democracy promotion, agriculture, and trade and investment. \

In July 2008, the UPA won a confidence motion with 275 votes in its favor and 256 against.

In late November 2008, terrorists killed at least 164 people in a series of coordinated attacks around Mumbai. Prime Minister Singh promised a thorough investigation and Home Minister Chidambaram pledged significant reforms to improve India’s counterterrorism agencies.

GOVERNMENTAccording to its Constitution, India is a "sovereign, socialist, secular, democratic republic." Like the United States, India has a federal form of government. However, the central government in India has greater power in relation to its states, and has adopted a British-style parliamentary system.

The government exercises its broad administrative powers in the name of the president, whose duties are largely ceremonial. A special electoral college elects the president and vice president indirectly for 5-year terms. Their terms are staggered, and the vice president does not automatically become president following the death or removal from office of the president.

Real national executive power is centered in the Cabinet (senior members of the Council of Ministers), led by the prime minister. The president appoints the prime minister, who is designated by legislators of the political party or coalition commanding a parliamentary

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majority in the Lok Sabha (lower house). The president then appoints subordinate ministers on the advice of the prime minister.

India's bicameral Parliament consists of the Rajya Sabha (Council of States) and the Lok Sabha (House of the People). The Council of Ministers is responsible to the Lok Sabha.

The legislatures of the states and union territories elect 233 members to the Rajya Sabha, and the president appoints another 12. The members of the Rajya Sabha serve 6-year terms, with one-third up for election every 2 years. The Lok Sabha consists of 545 members, who serve 5-year terms; 543 are directly elected, and two are appointed. India's independent judicial system began under the British, and its concepts and procedures resemble those of Anglo-Saxon countries. The Supreme Court consists of a chief justice and 25 other justices, all appointed by the president on the advice of the prime minister.

India has 28 states* and 7 union territories. At the state level, some legislatures are bicameral, patterned after the two houses of the national parliament. The states' chief ministers are responsible to the legislatures in the same way the prime minister is responsible to Parliament.

Each state also has a presidentially appointed governor, who may assume certain broad powers when directed by the central government. The central government exerts greater control over the union territories than over the states, although some territories have gained more power to administer their own affairs. Local governments in India have less autonomy than their counterparts in the United States. Some states are trying to revitalize the traditional village councils, or Panchayats, to promote popular democratic participation at the village level, where much of the population still lives. Over half a million Panchayats exist throughout India.

Pincipal Government OfficialsPresident—Pratibha D. PatilVice President--Mohammed Hamid AnsariPrime Minister--Dr. Manmohan SinghHome Minister—P. Chidambaram

POLITICAL CONDITIONSEmerging as the nation's single largest party in the April/May 2004 Lok Sabha election, Congress currently leads a coalition government under Prime Minister Manmohan Singh. Party President Sonia Gandhi was re-elected by the Party National Executive in May 2005. Also a Member of Parliament, she heads the Congress Lok Sabha delegation. Congress prides itself as a secular, left of center party, with a long history of political dominance. Although its performance in national elections had steadily declined during the last 12 years, its surprise victory in 2004 was a result of recruiting strong allies into the UPA, the anti-incumbency factor among voters, and its courtship of India's many poor, rural and Muslim voters. Congress political fortunes suffered badly in the 1990s, as many traditional supporters were lost to emerging regional and caste-based parties, such

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as the Bahujan Samaj Party and the Samajwadi Party, but have rebounded since its May 2004 ascension to power. It currently rules either directly or in coalition with its allies in 10 states. In November 2005, the Congress regained the Chief Ministership of Jammu and Kashmir state, under a power-sharing agreement.

The Bharatiya Janata Party (BJP), led by Rajnath Singh, holds the second-largest number of seats in the Lok Sabha. Former Prime Minister Atal Bihari Vajpayee serves as Chairman of the BJP Parliamentary Party, and former Deputy Prime Minister L.K. Advani is Leader of the Opposition. The Hindu-nationalist BJP draws its political strength mainly from the "Hindi Belt" in the northern and western regions of India.

The party holds power without outside support in the states of Chhattisgarh, Gujarat, Himachal Pradesh, Uttarakhand, Karnataka and Madhya Pradesh; it is part of ruling coalitions in few other states including Bihar, Orissa and Punjab. Popularly viewed as the party of the northern upper caste and trading communities, the BJP made strong inroads into lower castes in recent national and state assembly elections. The party must balance the competing interests of Hindu nationalists, (who advocate construction of a temple on a disputed site in Ayodhya, and other primarily religious issues including the propagation of anti-conversion laws and violence against religious minorities), and center-right modernizers who see the BJP as a party of economic and political reform. Four Communist and Marxist parties are united in a bloc called the "Left Front," which controls 59 parliamentary seats. The Left Front rules the states of West Bengal and Kerala. The Left Front provided external support to the UPA government until a July 2008 confidence vote. It advocates a secular and Communist ideology and opposes many aspects of economic liberalization and globalization, resulting in dissonance with Prime Minister Singh's liberal economic approach. The next general election is scheduled for April-May 2009.

ECONOMYIndia's population is estimated at more than 1.1 billion and is growing at 1.3% a year. It has the world's 12th largest economy--and the third largest in Asia behind Japan and China--with total GDP in 2007 of around $1.1 trillion ($1,100 billion), based on a 2007 year-end exchange rate of 39.5 rupees to the U.S. dollar. Services, industry, and agriculture account for 55%, 27%, and 18% of GDP respectively. Nearly two-thirds of the population depends on agriculture for its livelihood. 700 million Indians live on $2 per day or less, but there is a large and growing middle class of more than 50 million Indians with disposable income ranging from 200,000 to 1,000,000 rupees per year ($4166-$20,833). Estimates are that the middle class will grow ten-fold by 2025.. India continues to move forward, albeit haltingly, with market-oriented economic reforms that began in 1991. Reforms include increasingly liberal foreign investment and exchange regimes, industrial decontrol, reductions in tariffs and other trade barriers, opening and modernization of the financial sector, significant adjustments in government monetary and fiscal policies, and more safeguards for intellectual property rights.

Real GDP growth for the fiscal year ending March 31, 2007 was 9.4%, up from 9.0% growth in the previous year. Growth for the fiscal year ending March 31, 2009 was

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initially expected to be between 8.5-9.0%, but has been revised downward by a number of economists to 7.0% or less because of the financial crisis and resulting global economic slowdown. Foreign portfolio and direct investment inflows have risen significantly in recent years. They contributed to $255 billion in foreign exchange reserves by June 2007. Government receipts from privatization were about $3 billion in fiscal year 2003-2004, but the privatization program has stalled since then.

Economic growth is constrained by inadequate infrastructure, a cumbersome bureaucracy, corruption, labor market rigidities, regulatory and foreign investment controls, the "reservation" of key products for small-scale industries, and high fiscal deficits. The outlook for further trade liberalization is mixed and a key WTO Doha Ministerial in July 2008 was unsuccessful due to differences between the U.S. and India (as well as China) over market access. India eliminated quotas on 1,420 consumer imports in 2002 and has incrementally lowered non-agricultural customs duties in recent successive budgets. However, the tax structure is complex, with compounding effects of various taxes.

The United States is India's largest trading partner. Bilateral merchandise trade in 2007 was $41.6 billion. Principal U.S. exports are diagnostic or lab reagents, aircraft and parts, advanced machinery, cotton, fertilizers, ferrous waste/scrap metal, and computer hardware. Major U.S. imports from India include textiles and ready-made garments, Internet-enabled services, agricultural and related products, gems and jewelry, leather products, and chemicals.

The rapidly growing software sector is boosting service exports and modernizing India's economy. Software exports crossed $28 billion in FY 2006-2007, while business process outsourcing (BPO) revenues hit $8.3 billion in 2006-2007. Personal computer penetration is 14 per 1,000 persons. The cellular/mobile market surged to 140 million subscribers by November 2006. The country has 54 million cable TV customers.

The United States is India's largest investment partner, with a 13% share. India's total inflow of U.S. direct investment was estimated at more than $9 billion through 2006. Proposals for direct foreign investment are considered by the Foreign Investment Promotion Board and generally receive government approval. Automatic approvals are available for investments involving up to 100% foreign equity, depending on the kind of industry. Foreign investment is particularly sought after in power generation, telecommunications, ports, roads, petroleum exploration/processing, and mining.

India's external debt was $155 billion in 2006-2007, up from $126 billion in 2005-2006. Foreign assistance was approximately $3 billion in 2006-2007, with the United States providing about $126 million in development assistance. The World Bank plans to double aid to India to almost $3 billion a year, with focus on infrastructure, education, health, and rural livelihoods.

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DEFENSEThe supreme command of the Indian armed forces is vested in the President of India. Policies concerning India's defense, and the armed forces as a whole, are formulated and confirmed by the Cabinet.

The Indian Army numbers over 1.1 million strong and fields 34 divisions. Its primary task is to safeguard the territorial integrity of the country against external threats. The Army has been heavily committed in the recent past to counterterrorism operations in Jammu and Kashmir, as well as the in the Northeast. Its current modernization program focuses on obtaining equipment to be used in combating terror. The Army often provides aid to civil authorities and assists the government in organizing relief operations.

The Indian Navy is by far the most capable navy in the region. The Navy's primary missions are the defense of India and of India's vital sea lines of communication. India relies on the sea for 90% of its oil and natural gas and over 90% of its foreign trade. The Navy currently operates one aircraft carrier with two on order, 14 submarines, and 15 major surface combatants. It is capable of projecting power within the Indian Ocean basin and occasionally operates in the South China Sea, the Mediterranean Sea and the Arabian Gulf. Fleet introduction of the Brahmos cruise missile and the possible lease of nuclear submarines from Russia will add significantly to the Indian Navy's flexibility and striking power.

Although small, the Indian Coast Guard has been expanding rapidly in recent years. Indian Navy officers typically fill top Coast Guard positions to ensure coordination between the two services. India's Coast Guard is responsible for control of India's huge exclusive economic zone.

The Indian Air Force is becoming a 21st century force through modernization, new tactics and the acquisition of modern aircraft, such as the SU-30MKI, a new advanced jet trainer (BAE Hawk) and the indigenously produced advanced light helicopter (Dhruv). In April 2008 six firms submitted proposals to the Indian Government to manufacture 126 multi-role combat aircraft for the Indian Air Force.

FOREIGN RELATIONS India's size, population, and strategic location give it a prominent voice in international affairs, and its growing economic strength, military prowess, and scientific and technical capacity give it added weight. The end of the Cold War dramatically affected Indian foreign policy. India remains a leader of the developing world and the Non-Aligned Movement (NAM). India is now strengthening its political and commercial ties with the United States, Japan, the European Union, Iran, China, and the Association of Southeast Asian Nations. India is an active member of the South Asian Association for Regional Cooperation (SAARC).

Always an active member of the United Nations, India now seeks a permanent seat on the UN Security Council. India has a long tradition of participating in UN peacekeeping operations.

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Bilateral and Regional Relations: Pakistan. India and Pakistan have been locked in a tense rivalry since the partition of the subcontinent based on the “two-nations theory” upon achieving independence from Great Britain in 1947. The principal source of contention has been Kashmir, whose Hindu Maharaja at that time chose to join India, although a majority of his subjects were Muslim. India maintains that his decision and subsequent elections in Kashmir have made it an integral part of India. This dispute triggered wars between the two countries in 1947 and 1965 and provoked the Kargil conflict in 1999.

Pakistan and India fought a war in December 1971 following a political crisis in what was then East Pakistan and the flight of millions of Bengali refugees to India. The brief conflict left the situation largely unchanged in the west, where the two armies reached an impasse, but a decisive Indian victory in the east resulted in the creation of Bangladesh.

Since the 1971 war, Pakistan and India have made slow progress toward normalization of relations. In July 1972, Indian Prime Minister Indira Gandhi and Pakistani President Zulfikar Ali Bhutto met in the Indian hill station of Simla. They signed an agreement by which India would return all personnel and captured territory in the west and the two countries would "settle their differences by peaceful means through bilateral negotiations." Diplomatic and trade relations were re-established in 1976.

The 1979 Soviet invasion of Afghanistan caused new strains between India and Pakistan. Pakistan supported the Afghan resistance, while India implicitly supported the Soviet occupation. In the following eight years, India voiced increasing concern over Pakistani arms purchases, U.S. military aid to Pakistan, and Pakistan's nuclear weapons program. In an effort to curtail tensions, the two countries formed a joint commission. In December 1988, Prime Ministers Rajiv Gandhi and Benazir Bhutto concluded a pact not to attack each other's nuclear facilities and initiated agreements on cultural exchanges and civil aviation.

In 1997, high-level Indo-Pakistani talks resumed after a three-year pause. The Prime Ministers of India and Pakistan met twice, and the foreign secretaries conducted three rounds of talks. In June 1997 at Lahore, the foreign secretaries identified eight "outstanding issues" around which continuing talks would be focused. The dispute over the status of Jammu and Kashmir, an issue since partition, remains the major stumbling block in their dialogue. India maintains that the entire former princely state is an integral part of the Indian union, while Pakistan insists upon the implementation of UN resolutions calling for self-determination for the people of the state.

In September 1997, the talks broke down over the structure of how to deal with the issues of Kashmir and peace and security. Pakistan advocated that separate working groups treat each issue. India responded that the two issues be taken up along with six others on a simultaneous basis. In May 1998 India, and then Pakistan, conducted nuclear tests. Attempts to restart dialogue between the two nations were given a major boost by the February 1999 meeting of both Prime Ministers in Lahore and their signing of three agreements. These efforts were stalled by the intrusion of Pakistani-backed forces into

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Indian-held territory near Kargil in May 1999 (that nearly turned into full scale war), and by the military coup in Pakistan that overturned the Nawaz Sharif government in October the same year. In July 2001, Mr. Vajpayee and General Pervez Musharraf, leader of Pakistan after the coup, met in Agra, but talks ended after two days without result.

After an attack on the Indian Parliament in December 2001, India-Pakistan relations cooled further as India accused Pakistan of involvement. Tensions increased, fueled by killings in Jammu and Kashmir, peaking in a troop buildup by both sides in early 2002.

Prime Minister Vajpayee's April 18, 2003 speech in Srinagar (Kashmir) revived bilateral efforts to normalize relations. In November 2003, Prime Minister Vajpayee and President Musharraf agreed to a ceasefire, which still holds, along the Line-of-Control in Jammu and Kashmir. After a series of confidence building measures, Prime Minister Vajpayee and President Musharraf met on the sidelines of the January 2004 SAARC summit in Islamabad and agreed to commence a Composite Dialogue addressing outstanding issues between India and Pakistan, including Kashmir.

In February 2004, India and Pakistan agreed to restart the "2+6" Composite Dialogue formula, which provides for talks on Peace and Security and Jammu and Kashmir, followed by technical and Secretary-level discussions on six other bilateral disputes: Siachen Glacier, Wuller Barrage/Tulbul Navigation Project, Sir Creek estuary, Terrorism and Drug Trafficking, Economic and Commercial cooperation, and the Promotion of Friendly Exchanges in various fields. The restart of the Composite Dialogue process was especially significant given the almost six years that had transpired since the two sides agreed to this formula in 1997-1998. The UPA government continued the Composite Dialogue with Pakistan. Following the October 2005 earthquake in Kashmir, the two governments coordinated relief efforts and opened access points along the Line-of-Control to allow relief supplies to flow from India to Pakistan and to allow Kashmiris from both sides to visit one another.

The Foreign Secretary talks resumed in November 2006, after a three-month delay following the July 11, 2006 terrorist bombings in Mumbai. The meeting generated modest progress, with the two sides agreeing to establish a joint mechanism on counter-terrorism. Since 2006, India and Pakistan have continued to take part in the Composite Dialogue process in an effort to maintain the peace process and strengthen bilateral relations. Since Pakistani elections in February 2008 the Indian Minister of External Affairs and the Indian Foreign Secretary have met with their new counterparts to advance the Composite Dialogue talks, reaffirming a commitment to maintain the ceasefire along the Line-of-Control as well as increasing people-to-people connections through improving cross-border bus services. The Mumbai terrorist attacks in November 2008, however, have increased tensions between India and Pakistan.

SAARC. Certain aspects of India's relations within the subcontinent are conducted through the South Asian Association for Regional Cooperation (SAARC). Its members are Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, with the People's Republic of China, Iran, Japan, European Union, Republic of Korea,

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and the U.S. as observers. Established in 1985, SAARC encourages cooperation in agriculture, rural development, science and technology, culture, health, population control, narcotics, and terrorism.

SAARC has intentionally stressed these "core issues" and avoided those which could prove divisive, although political dialogue is often conducted on the margins of SAARC meetings. In 1993, India and its SAARC partners signed an agreement gradually to lower tariffs within the region. Forward movement in SAARC had slowed because of tension between India and Pakistan, and the SAARC summit scheduled for 1999 was not held until January 2002. In addition, to boost the process of normalizing India's relationship with Pakistan, the January 2004 SAARC summit in Islamabad produced an agreement to establish a South Asia Free Trade Area (SAFTA). All the member governments have ratified SAFTA, which was slated to come into force on January 1, 2006, with a series of graduated tariff cuts through 2015. As of December 2006, however, the FTA partners were still negotiating sensitive product lists, rules of origin, and technical assistance. India hosted the 2007 SAARC summit, which called for greater regional cooperation on trade, environmental, social, and counterterrorism issues. At the 2008 SAARC summit in Sri Lanka, the SAFTA member countries signed a protocol for Afghanistan’s accession and several countries (Including India, Pakistan, and Sri Lanka) agreed to drop some items from their sensitive product lists.

China. Despite suspicions remaining from a 1962 border conflict between India and China and continuing territorial/boundary disputes, Sino-Indian relations have improved gradually since 1988. Both countries have sought to reduce tensions along the frontier, expand trade and cultural ties, and normalize relations. Their bilateral trade reached $24 billion in 2006. China is India's second-largest trading partner behind the U.S.

A series of high-level visits between the two nations has improved relations. In December 1996, Chinese President Jiang Zemin visited India on a tour of South Asia. While in New Delhi, he and the Indian Prime Minister signed a series of confidence-building measures along the disputed border, including troop reductions and weapons limitations.

Chinese Premier Wen Jiabao invited Prime Minister Vajpayee to visit China in June 2003. They recognized the common goals of both countries and made the commitment to build a "long-term constructive and cooperative partnership" to peacefully promote their mutual political and economic goals without encroaching upon their good relations with other countries. In Beijing, Prime Minister Vajpayee proposed the designation of special representatives to discuss the border dispute at the political level, a process that is still under way.

In November 2006, President Hu Jintao made an official state visit to India, further cementing Sino-Indian relations. India and China are building on growing economic ties to improve other aspects of their relationship such as counter-terrorism, energy, and trade. In another symbol of improved ties, the two countries opened the Nathu La Pass to bilateral trade in July 2006 for the first time in 40 years. Though it is the first direct land

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trade route in decades, trade is expected to be local and small since the pass is open only four months a year.

Prime Minister Manmohan Singh met Chinese President Hu Jintao in January 2008 in Beijing in an effort to reinforce their confidence to further develop ties, vowing to promote their relations to a higher level. The meetings cemented a shared vision for the 21st century, agreeing to raise the annual volume of bilateral trade to $60 billion by 2010.

ormer Soviet Union. The collapse of the Soviet Union in 1991 and the emergence of the Commonwealth of Independent States (CIS) had major repercussions for Indian foreign policy. India's substantial trade with the region plummeted after the Soviet collapse and has yet to recover. Longstanding military supply relationships were similarly disrupted due to questions over financing. Russia nonetheless remains India's largest supplier of military systems and spare parts.

Russia and India have not renewed the 1971 Indo-Soviet Peace and Friendship Treaty and follow what both describe as a more pragmatic, less ideological relationship. The visit of Russian President Boris Yeltsin to India in January 1993 helped cement this new relationship. The pace of high-level visits has since increased, as has discussion of major defense purchases. UPA leader Sonia Gandhi and Prime Minister Singh visited Russia in July 2005. President Vladimir Putin traveled to India in January 2007 to attend an Indo-Russia Summit and was the guest of honor at India's Republic Day celebrations. President Medvedev visited India in December 2008 and signed a civil nuclear agreement.

U.S.-INDIA RELATIONS Recognizing India as a key to strategic U.S. interests, the United States has sought to strengthen its relationship with India. The two countries are the world's largest democracies, both committed to political freedom protected by representative government. India is also moving gradually toward greater economic freedom. The U.S. and India have a common interest in the free flow of commerce and resources, including through the vital sea lanes of the Indian Ocean. They also share an interest in fighting terrorism and in creating a strategically stable Asia.

There were some differences, however, including over India's nuclear weapons programs and the pace of India's economic reforms. In the past, these concerns may have dominated U.S. thinking about India, but today the U.S. views India as a growing world power with which it shares common strategic interests. A strong partnership between the two countries will continue to address differences and shape a dynamic and collaborative future.

In late September 2001, President Bush lifted sanctions imposed under the terms of the 1994 Nuclear Proliferation Prevention Act following India's nuclear tests in May 1998. The nonproliferation dialogue initiated after the 1998 nuclear tests has bridged many of the gaps in understanding between the countries. In a meeting between President Bush and Prime Minister Vajpayee in November 2001, the two leaders expressed a strong

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interest in transforming the U.S.-India bilateral relationship. High-level meetings and concrete cooperation between the two countries increased during 2002 and 2003. In January 2004, the U.S. and India launched the Next Steps in Strategic Partnership (NSSP), which was both a milestone in the transformation of the bilateral relationship and a blueprint for its further progress.

In July 2005, President Bush hosted Prime Minister Singh in Washington, DC. The two leaders announced the successful completion of the NSSP, as well as other agreements which further enhance cooperation in the areas of civil nuclear, civil space, and high-technology commerce. Other initiatives announced at this meeting include: an U.S.-India Economic Dialogue, Fight Against HIV/AIDS, Disaster Relief, Technology Cooperation, Democracy Initiative, an Agriculture Knowledge Initiative, a Trade Policy Forum, Energy Dialogue and CEO Forum. President Bush made a reciprocal visit to India in March 2006, during which the progress of these initiatives were reviewed, and new initiatives were launched.

In December 2006, Congress passed the historic Henry J. Hyde United States-India Peaceful Atomic Cooperation Act, which allows direct civilian nuclear commerce with India for the first time in 30 years. U.S. policy had opposed nuclear cooperation with India because the country had developed nuclear weapons in contravention of international conventions and never signed the Nuclear Non-Proliferation Treaty. The legislation clears the way for India to buy U.S. nuclear reactors and fuel for civilian use. In July 2007, the United States and India reached a historic milestone in their strategic partnership by completing negotiations on the bilateral agreement for peaceful nuclear cooperation, also known as the "123 agreement." This agreement, signed by Secretary of State Rice and External Affairs Minister Mukherjee on October 10, 2008, governs civil nuclear trade between the two countries and opens the door for American and Indian firms to participate in each other's civil nuclear energy sector. The U.S. and India seek to elevate the strategic partnership further to include cooperation in counter-terrorism, defense cooperation, education, and joint democracy promotion.

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1.3 SRI LANKA

HISTORY

Sri Lanka's history has reflected its close links with the subcontinent and with South East Asia. The colonial European powers arrived in 1505. The Portuguese, the Dutch and then the British ruled Sri Lanka. Sri Lanka (or Ceylon, as it was then known) gained independence from Britain in February 1948.

Recent Political History

Following independence from Britain in February 1948, the political scene has been dominated by two parties: the United National Party (UNP) and the Sri Lanka Freedom Party (SLFP), which is now part of the People’s Alliance (PA). The SLFP was founded by S W R D Banadaranaike, who was Prime Minister until he was assassinated in 1959 by a Buddhist extremist. His widow, Sirimavo Banadaranaike, became leader of the SLFP and served as both Prime Minister and leader of the opposition.

A republican constitution was adopted in 1972 and the ruling coalition, led by Sirimavo Banadaranaike, gave itself an extra two years in power. The UNP returned to power in 1978 and adopted a new constitution based on an executive presidency. It introduced for the first time elections based on proportional representation. The UNP's Ranasinghe Premadasa won the presidential election in 1988 and served as President until his assassination in 1993.

The SLFP became part of the People’s Alliance (PA) coalition headed by Chandrika Kumaratunga. Mrs Kumaratunga went on to win a landslide victory in elections in November 1994 and 1999 and served as President until November 2005. The PA also won the Parliamentary elections in October 2000. In 2001, less than a year after being re-elected, the PA lost their majority. The United National Front coalition, lead by UNP Ranil Wickremasinghe, won with 109 seats and the President’s PA came second with 77 seats, which led to an arrangement of political cohabitation between two rival parties, with the PA’s leader as President and the UNP’s leader as Prime Minister.

In November 2003, President Kumaratunga suspended parliament, sacked three key ministers taking over their portfolios (including defence) and declared a state of emergency (which was lifted a few days later). This was done on the grounds of national security, and the actions were within her Constitutional powers. No agreement on working arrangements was reached between the President and Prime Minister, and in

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January 2004, the SLFP signed an alliance with the JVP forming the United People’s Freedom Alliance (UPFA).

In February 2004, the President dissolved Parliament and called general elections in April. The elections in April 2004 produced a new political order with the victory of the UPFA (SLFP and JVP alliance). Support for the traditional parties dropped, and smaller parties - JVP, TNA and JHU gained significant numbers of seats. The UPFA formed a minority government. In September 2004, the Ceylon Workers' Congress (CWC – representing Indian-origin Tamils) with 8 seats joined the government giving it a small majority. In June 2005 the JVP left the Government after the President’s decision to sign a post-tsunami funding arrangement with the LTTE.

Latest Political Developments

Mahinda Rajapakse (SLFP) was elected as President in November 2005 with 50.3% of the vote. The Liberation Tigers of Tamil Eelam (LTTE) enforced a boycott of the poll in Tamil areas under their control or which they strongly influence in the north and east of the country. This resulted in extremely low voter participation in these areas. Ranil Wickremesinghe, UNP Presidential candidate and Leader of the Opposition took 48.4%. The JVP and JHU, which supported Rajapakse’s candidature, decided not to join the Government.In January 2007, a number of UNP members joined the government team giving it a parliamentary majority. A cabinet reshuffle followed.

POLITICS

The Internal Conflict

The ethnic conflict in Sri Lanka has been going on for over 25 years as the Liberation Tigers of Tamil Eelam (LTTE) fight for an independent homeland. Some 70,000 people are estimated to have been killed and some one million displaced.

The roots of the conflict lie in the deterioration of relations between the Tamil and Sinhalese communities from the 1950s. By the late 1970s a number of armed groups were operating in the north and east of the island. In 1983 there were serious anti-Tamil riots in Colombo resulting in the lynching and killing of some 2000 Tamils. Some Ministers in the Government of Sri Lanka were implicated in the event. Many Tamils returned to traditional Tamil areas in the North and many others began to seek asylum abroad.

One of the highest profile violent acts was the assassination of the Mayor of Jaffna in 1975 by Vellupillai Prabhakaran who later became established as the leader of the LTTE.

In mid 1987 when a Government of Sri Lanka embargo of Jaffna began to result in severe hardship, the Government of India, pushed by public opinion in Tamil Nadu, forced the Sri Lankan Government to sign the Indo-Sri Lankan Accord This provided for an Indian

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peacekeeping Force (IPKF) in the North and East. However relations between the IPKF and the LTTE broke down and there was heavy fighting and reports of human rights violations on both sides. President Premadasa negotiated the IPKF's withdrawal, which was completed in March 1990.

During 1988, in part against the India intervention, unrest among the Sinhalese community grew into a violent insurgency by the Janatha Vimukthi Peramuna (JVP) and a counter-terrorist campaign. The rebellion ended in 1989 after JVP leaders were murdered. The Sri Lankan army undertook a ruthless counter-insurgency campaign and tens of thousands were killed.

There followed a period of relative peace before the situation in the North and East deteriorated in June 1990. After 18 months, negotiations fell apart and the LTTE again resorted to violence. They extended their control until they held the Tamil heartland: the Jaffna Peninsula and large areas of the North and East. The security forces succeeded in winning back most of the East, but the North remained outside their control.

Hundreds of people have been killed and injured in terrorist attacks relating to the conflict. Former Indian Prime Minister Rajiv Gandhi was assassinated in southern India in May 1991. President Premadasa was assassinated in May 1993.

The Conflict Since 1995

In July 1995, the Sri Lankan army launched a military operation, culminating in the fall of Jaffna in December 1995 to Government forces. At the end of January 1996 the LTTE began a bombing campaign in Colombo (see Terrorist Attacks below).

During 1996, the Sri Lankan army secured enough of the Jaffna Peninsula to allow the civilian population to return to Jaffna town. The LTTE reasserted themselves in the Eastern province and infiltrated back into the Jaffna Peninsula. LTTE inspired terrorist attacks continued in the south, including on the Temple of the Tooth in Kandy, the most sacred Buddhist site in Sri Lanka.

In March 1999 the Sri Lankan Army launched two major offensives in the Vanni and captured over 800 sq kms of territory from the LTTE. Fighting in the North intensified in late 1999 and the Vanni (jungle areas in the North) fell to the LTTE after some of the fiercest fighting since the conflict began. In April 2000 the LTTE carried out a major assault which led to the withdrawal of Sri Lankan troops from Elephant Pass (which links the Jaffna peninsula to the rest of Sri Lanka). With control of Elephant Pass, the LTTE continued further attacks into the Jaffna Peninsula. Fighting continued until December 2001 when the announcement of a new ceasefire by the LTTE was reciprocated by the newly elected UNF government. A Ceasefire Agreement was signed in February 2002 by the government and LTTE.

In April 2004, the LTTE’s eastern commander, Karuna and a group broke away form the LTTE. He complained that the LTTE leadership did not sufficiently look after the

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interests of those in the east of the country. The Karuna group aligned themselves to the Government and fought against the LTTE in the East.

There has been an intensification of violence since the end 2005. After an initial period of violence in December 2005 and January 2006,  and short-lived talks, large-scale violence resumed in April. Talks were eventually held in Geneva in October 2006, but were inconclusive. In January 2008 the Government of Sri Lanka abrogated the Ceasefire Agreement.

The Peace Process

When she came to power in 1994, President Kumaratunga made a solution to the conflict with the LTTE her major priority. Peace talks were offered and a cease-fire began in January 1995. But in April that year the LTTE broke off the talks and returned to a military campaign. There were no further attempts to broker peace talks until February 2000 when the Norwegian government announced that it had agreed to a request by both parties to the conflict to work towards bringing the two sides together for peace talks.

On 24 December 2000, the LTTE announced a month-long unilateral cease-fire, which was extended until 24 April 2001. The PA government did not reciprocate, saying a cease-fire would be consequent step once peace talks began. The following year the LTTE again announced a month-long cessation of hostilities from midnight on 24 December. The newly elected UNF government quickly reciprocated. The cease-fire was extended until 24 February 2002, and on 22 February the Norwegians announced that the Sri Lankan government and the LTTE had signed an agreement on the cessation of hostilities.

The agreement committed the parties to put an end to hostilities and restore normalcy for all Sri Lankans and committed the parties to begin peace talks. Six rounds of talks were held producing a number of agreements in principle, including agreement to explore a solution founded on the principle of internal self-determination for the Tamil people, based on a federal structure within a united Sri Lanka; and agreement to develop a human rights roadmap. However in April 2003, the LTTE suspended their participation in the peace talks saying they wanted agreement on an interim administration before they would negotiate on other issues. The LTTE failed to attend a major donor meeting in Tokyo in June 2003 at which the international community demonstrated its commitment to reconstruction and development in Sri Lanka.

Both the Government and the LTTE submitted proposals for an interim administration for the North East. Before these proposals were discussed however, President Kumaratunga took over several Government ministries in November 2003 claiming that the UNP Government was endangering Sri Lanka’s security. This ended the uneasy cohabitation between the President and Prime Minister Wickremasinghe (long time political rivals). After several months of uncertainty the President dissolved parliament and called elections. Her UFPA coalition (her SLFP and the Sinhala nationalist left wing JVP) won the most seats and was later able to command a small majority. During the election

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campaign, the LTTE stated their willingness to negotiate with any party, which had a mandate for talks. The government said that restarting the peace talks was a priority for them and renewed the mandate of Norway as peace facilitators. Since then and despite energetic shuttle diplomacy there has been no agreement on a resumption of talks.

It was initially hoped that following the tsunami in 2004 would present an opportunity for the two sides to work together in a common purpose and might pave the way for a return to the negotiating table, but this did not prove to be the case.

Recent Developments

Throughout 2007, a number of high profile terrorist attacks occurred across the island. Tensions between the Government troops and LTTE intensified, leading to an increasing number of skirmishes. In January 2008, the Government announced its formal abrogation of the Peace Agreement.

2008 saw the Government launch a large-scale military offensive against LTTE controlled territory in the north.In January 2009, government troops captured the towns of Mullaitivu and Kilinochchi, the LTTE’s military and administrative headquarters, and the strategic Elephant’s Pass, which links Jaffna peninsular to the rest of the island.

By March 2009, the LTTE controlled a small area of jungle, and was surrounded by Government troops. Thousands of civilians are believed to be caught in intense fighting.

International concerns have been raised about the safety of civilians and access by humanitarian organisations..

Geography

Area: 65,610 sq kmPopulation: 19.4 million (2008, UN)Capital City: Colombo (population 2.2m)People: 73.94% Sinhalese, 12.7% Tamil, 7.1% Muslim, 5.5% Hill Tamil, and 1.5% otherLanguages: Sinhalese, Tamil, EnglishReligion(s): Buddhist (69.3%); Hindu (15.5%); Muslim (7.5%); Christianity (6.9%), other (0.8%)Currency: Rupee, divided into 100 centsMajor political parties: Sri Lanka Freedom Party (SLFP) (President’s party and largest government party), United National Party (UNP) (main opposition party), Janatha Vimukthi Peramuna (JVP) (left wing, Sinhala nationalist), Tamil National Alliance (a coalition of Tamil parties), Sri Lanka Muslim Congress (SLMC), Jathika Hela Urumaya (JHU) (Sinhala nationalist Buddhist party led by monks), Tamil United Liberation Front (TULF) (member of the TNA), Eelam People's Democratic Party (EPDP) (a Tamil party opposed to the LTTE), Ceylon Workers Congress (CWC) (represents Hill Tamils)Government: Unicameral Parliament with Executive Presidency

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Head of State (President): His Excellency Mr Mahinda RajapaksePrime Minister/Premier: The Hon Ratnasiri WickremanayakeForeign Minister: The Hon. Rohitha Bogollagama MPMembership of international groupings/organisations: Commonwealth, The South Asian Association for Regional Co-operation (SAARC), United Nations (UN), Non Aligned Movement (NAM), Group of 77 at the United Nations (G77).

ECONOMY

Basic Economic Facts

GDP: US$ 30.0bn (2007)GDP per head: US$ 1506 (2007)GDP Growth: 6.8% (2007)Inflation: above 20% (2008, UKTI)Major Industries: Agriculture, forestry, fishing, Manufacturing, Construction, Utilities, Services.Major trading partners: Main destinations of exports are: US (32.4%), EU (32.4%), Middle East (7.5%), and CIS (3.5%). Main origins of imports are: India (18%), Singapore (8.7%), Hong Kong (7.7 %), China (5.7%), Iran (5.2%).Aid & development: The international donor community agreed US$ 4.5 billion for the period 2003-6. This was conditional on progress in the peace process, which unfortunately has not been achieved. Donors pledged approximately US$500 million for post-tsunami reconstruction. Sri Lanka entered into negotiations with IMF in March 2009.Tourist arrivals by country of residence: Jan-Sept 2005 - India 82,434; UK 68,493; followed by Germany, France, Australia and North AmericaExchange rate: (March 2009) US$1 - 113.99 rupees, £1 Sterling - 165.20 rupees

INTERNATIONAL RELATIONS

The Department for Business, Enterprise and Regulatory Reform (BERR) monitors trade and investment figures worldwide. For current economic background and sector reports on Sri Lanka please visit the UK Trade and Investment website:

UK Trade & Investment Country Profile: Sri Lanka

In March 2000 the Indo-Sri Lankan Free Trade Agreement (FTA) came into effect. At the SAARC (South Asian Association for Regional Co-operation) conference held in Pakistan in early January 2004 a wider free trade agreement between all SAARC members (due to enter into force in January 2006) was signed and entered into force in 2006.

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UK/SRI LANKA RELATIONS

Bilateral relations are good. Lord Malloch-Brown, Minister of State at the Foreign & Commonwealth Office, visited Sri Lanka in July 2008. Dr Kim Howells visited in February 2007. Stephen Timms, Chief Secretary to the Treasury visited in September 2006 and the Rt. Hon. Paul Murphy MP in November 2006. Ian Pearson, the then Minister of State for Trade, Investment and Foreign Affairs met the then Foreign Minister Mangala Samaraweera, when he visited Sri Lanka in January 2006.

The Foreign Minister of Sri Lanka, Rohitha Bogollagama visited the UK in March 2007, meeting the then Foreign Secretary, Margaret Beckett and Gareth Thomas, Parliamentary Under-Secretary of State at the Department for International Development. He returned to the UK in April 2008 when he met the Foreign Secretary. President Rajapakse made a private visit to the UK in August 2006 during which he met the former Prime Minister Tony Blair at Chequers.

On 12 February 2009 Prime Minister Gordon Brown appointed former Cabinet Minister Des Browne as his Special Envoy for Sri Lanka.

There are approximately 200,000 Sri Lankans settled in Britain, equally divided between Sinhalese and Tamils.UK Development Assistance.

In October 2008, the UK committed £2.5 million in humanitarian aid for the Internally Displaced Persons (IDPs) affected by the fighting in northern Sri Lanka. In January 2009, an additional £2.5 million was set aside.  The funds are being used to help underwrite the efforts of key humanitarian agencies, including UN agencies and the International Committee of the Red Cross (ICRC).  

Our interest in helping to support a lasting resolution to the Sri Lankan conflict led the UK, along with other donor countries, to focus efforts on strengthening incentives for peace and reconciliation. These initiatives include:

Encouraging key donors to adopt conflict sensitive approaches; reducing communal tensions through greater adherence to human rights standards;

supporting greater preparedness for achieving a political solution to the conflict and post-conflict recovery and reconstruction;

strengthening civil society to contribute more effectively to reconciliation;

helping to make national and state institutions more accountable and enabled to support the peace process; 

improving the livelihood and security of those affected by conflict.

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Sri Lanka is a middle income country with approximately 1 million people (6%) of the population living in poverty. The major cause of poverty is the long running conflict, so poverty reduction is dependent upon achieving lasting peace.

The Department for International Development (DFID) working with the World Bank and Government of Sri Lanka has contributed to the development of a National Education Sector Strategy aimed at maximising the role of education to social harmony and peace building.

Following the tsunami on 26 December 2004, the UK Government committed £75million for immediate relief and recovery in the affected area, including Sri Lanka, and at the end of March 2005 announced a further £65 million for longer term reconstruction and rehabilitation. The UK’s humanitarian response in Sri Lanka has been channelled through United Nations agencies, the Red Cross movement, Non-Governmental Organisations (NGOs) as well as direct inventions aimed at addressing urgent requirements, and in support of the United Nations’ assessment, information dissemination and coordination role.UK aid has contributed to projects including health, water and sanitation, tracing of missing persons, food distribution, shelter related activities including housing repairs, mental health and psycho-social support, restoration of livelihoods, consolidation and air freighting of drugs donated by UK pharmaceutical industry.

Cultural Relations with the UK

The British Council has English Teaching Centres in Colombo (one of the fastest growing in the network with well over 3000 students) and Kandy, and is involved in English language projects throughout the island. It also runs busy libraries at the teaching centres, and maintains a lively arts programme.

The Council runs an education information service that offers detailed information on all aspects of the British education system, and administers exams in Colombo and Kandy.

In Sri Lanka the Council also works closely with the Ministry of Education on its education reform agenda, particularly at Primary level.

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1.4 Trade between Sri Lanka and India

01.Total TradeSpurred by the implementation of ISFTA in 2000, exports from Sri Lanka to India have increased over the years except for the year 2006 (vide table 1).  The value of Sri Lanka’s exports to India increased from US$ 55.7 Mn. in 2000, (the year ISFTA became operational) to US$ 516.4 Mn. in 2007. The decline of Sri Lanka’s exports to India in 2006 was mainly due to a significant decrease in exports of the two main products, namely, primary copper (HS. 7403) and vanaspati (HS. 151620).

For the first time in the history, the two way merchandise trade exceeded US$ three billion in 2007 representing 17% of Sri Lanka’s trade with the world.  

Trade behavior between India and Sri Lanka Value in Mn US$

Year Exports Imports Total Trade Balance of Trade

1998 35.3 554.8 590.1 -519.5

1999 47.2 511.6 558.8 -464.4

2000 55.7 600.1 655.8 -544.4

2001 70.1 601.5 671.6 -531.4

2002 168.9 834.7 1,003.6 -665.8

2003 241.1 1,076.2 1,317.3 -835.0

2004 385.5 1,358.0 1,743.5 -972.5

2005 559.3 1,440.4 1,999.7 -881.1

2006 494.1 1,822.1 2,316.2 -1,328.0

2007 516.4 2,785.0 3,301.4 - 2,268.6

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02 .Balance of Trade   The balance of trade between India and Sri Lanka, which has always been in favour of India, continued to widen over the years. The bilateral balance of trade exceeded US$ 2 Billion (US$ 2,268.6 Mn) in 2007, which was the highest trade gap between the two countries in favor of India.  This was mainly due to the increase outlay on major import items from India, such as petroleum products, iron or steel & its' articles, cotton, Import from India in terms of value increased from US$ 1.8 billion in 2006 to US$ 2.8 billion in 2007 registering an increase of 52%. Sri Lanka’s exports however, grew only by 4.5% from US$ 494.1 million to US$ 516.4 million in 2007 resulting in a huge trade gap.    

03.  ExportsIndia, which ranked as the 16th largest export destination of Sri Lanka in year 2000, emerged as the 3rd largest buyer in 2003. Accounting for 6.7% of Sri Lanka’s total exports to the world, India remained the island’s 3rd largest buyer in the year 2007 after U.S.A. and U.K. At present, more than 70% of the total value of Sri Lanka’s exports enters India under the tariff preferences offered through the ISFTA. In 1996, 1997 and from 2001 India became the largest supplier to Sri Lanka overtaking Japan. Sri Lanka’s share of imports from India during 2007 accounted for 24.4% of its total imports from the whole world.

Export from Sri Lanka to India increased by 4.5 % from US$ 494.06 Million in 2006 to US$ 516.40 Million in 2007(Please see Annex I). It is observed that in 2007, several major product categories recorded increases, when compared with 2006.  (Vide table 2) Items in the table 2 (Export of major product categories to India) represent 73.7% of Sri Lankan total exports to India in 2007 and recorded 67% growth when compared with 2006.   

28

1.5 Major items, which recorded export growth (Value in Mn US$)

Product  Category

Description 2006 2007

151620 Vanaspati 79.69 145.32

8544 Insulated wire & cable 33.15 38.10

40 Rubber & articles thereof 19.02 35.44

151790 Margarine 23.18 25.04

090411 Peper 13.23 18.33

4707 Waste & scrap paper/paperboard 11.21 15.30

890400 Tugs and pusher craft 0.00 14.59

230990 Animal feeds 4.31 12.57

151110 Crude Palm oil 5.54 10.11

84 Boilers & machinery & parts 9.02 9.35

441112 Medium density fibreboard (MDF) 0.00 9.17

29

94 Furniture,lamps & fittings,illuminated name plates 6.43 8.45

48 Articles of paper pulp, paper & paperboard 5.31 5.72

2302 Bran, sharps and other residues 2.3 4.99

780199 Lead based products   2.8 4.59

3823 fatty acids; acid oils from refining; industrial fatty alcolhols 2.2 4.32

58 woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery 3.4 4.30

7102 Diamonds 0.8 4.26

61TO 62 Articles of apparel 2.41 4.19

60 Fabrics 2.3 4.18

0902 Tea 1.43 2.08

Total 227.7 380.4

Products, which are otherwise uncompetitive, become competitive in term of landed price in the importing country by enjoying tariff concessions. Such products lost their competitiveness during the year 2007 due to the erosion of margin of preferences consequence to the MFN tariff reduction in India. Relocation of factories based on the incidence of tariff arbitrage also find it difficult to sustain in the new location due to the erosion of tariff preferences. Under these circumstances, the values of following products (Vide table 3 (a)) have been gradually declining in parallel to the unilateral reduction of MFN duties by India. 

Major items, which recorded export decrease Value in Mn US$

Product  Category

Discription 2006 2007

30

7403 Refined copper and copper alloys, products

49.0621.20

7605 -Aluminium wire. 25.00 0.00

72TO 73 Iron or steel & its' articles 6.93 4.99

7601 Aluminium products 3.19 0.18

68 Marble 22.69 15.79

282490 Lead oxide 4.69 3.18

740811 -Copper wire. 7.15 0.58

740400 Copper waste & scrap 5.34 0.27

Total 124.1 46.2

Other major export items other than those listed in the above table, recorded negative growths at varying degrees due to a variety of reasons.

Major items, which recorded export decrease Value in Mn US$

Product  Category

Discription 2006 2007

294190 Antibiotics 7.29 0.00

090700 Cloves 11.78 8.36

441199 Fiberboard 9.25 4.72

392620 Articles of apparel & clothing  accessories 3.80 1.07

520939 Cotton fabrics 8.21 7.06

31

340290 Cleaning solutions 4.08 0.00

Total 44.4 21.2

04. Import from IndiaImports from India to Sri Lanka increased by 52.8% from US$ 1.8 billion in 2006 to US$ 2.7 billion in 2007(Plea see Annex 2).  This increase was mainly due to higher import outlay on petroleum products, which accounted for 43% of total imports from India in 2007. (Table 4)  

Table 4: Analysis on total Indian export to Sri LankaValue in Mn US$

Year Total imports

% change compared to previous year

Import of petroleum

product from India

Total imports excluded petroleum product

% change compared to

previous year excluding import of petroleum products

2003 1076.2 28.9 195.7 880.5 14.2

2004 1358.0 26.2 284.9 1073.1 21.9

2005 1440.4 6.1 239.2 1201.2 11.9

2006 1822.1 26.5 402.0 1420.1 18.2

2007 2785.0 52.8 1202.4 1582.6 11.4

Major categories of imports from India, in addition to petroleum product, are agricultural products medicaments and its articles, cotton, motorcycles, motorcars and other motor vehicles.A salient feature of Sri Lanka’s import from India is 100 products (at 6 digit level) accounted for 84% of total value in 2007(Table 5).

32

Analysis on main 100 import items (Tariff lines at six digit level) from India to Sri Lanka  

Category  Negative list items

Non Negative list items

Tariff concessions available

Total

MFN duty free

No of tariff lines 35 28 37 100 Items

Value Mn. US$ 1659 257 420 2336

%  value out of 100 tariff lines

71 11 18 100 %

% value in the Negative list items in the 100 products as a SL’s total exports

60 09 15 84%

Out of 100 products referred to the above, 35 products accounting for 60% of Sri Lanka’s total imports from India in 2007 did not enjoy duty concession under the ISFTA as these products come under Sri Lanka’s negative list.  This category includes products such as petroleum products, certain categories of motor vehicles, main agricultural products and paper and paper products.    Out of 100 products referred to the above, 28 products accounting for 09% of Sri Lanka’s imports from India in 2007 were subject to 0% duty on MFN basis. This category included essential products such as textile, carbon, yarn, pharmaceutical products etc.

Out of 100 products referred to the above, 37 products accounting for 15% of Sri Lanka’s imports from India in 2007 were eligible for tariff concessions. This category included motor cycles, solid residues, cement etc.

05. Import / Export Growth and Import / Export Ratio

Despite the widening trade gap in favour of India, Sri Lanka has been enjoying higher export growth than that of India from 2002 to 2005 as could be seen from the Table 6.  The pattern of Import / Export Ratio has also been improving to the advantage of Sri Lanka till year 2006 (Table 7).   However, these patterns have changed in the opposite direction from 2006, which were deepened by the higher import outlay on petroleum

33

products.

Import / Export GrowthValue in Mn US$

Year % change compare to previous year

Sri Lankan Export

Sri Lankan Import

2001 25.9 0.2

2002 140.9 38.8

2003 42.7 28.9

2004 59.9 26.2

2005 45.1 6.1

2006  -11.7 26.5

2007 4.5 52.8

Import Export Ratio Value in Mn US$

Year Exports Imports Import / Export Ratio

2001 70.1 601.5 1  :  8.6

2002 168.9 834.7 1  :  4.9

34

2003 241.1 1,076.2 1  :  4.5

2004 385.5 1,358.0 1  :  3.5

2005 559.3 1,440.4 1  :  2.6

2006 494.1 1,822.1 1 :  3.7

2007 516.4 2,785.0 1  : 5.4

1.6ELIMINATION OF TARRIFS

35

1. Zero duty on items upon entering into force of agreement – the list is to be finalized with in 60 days of signing of the agreement. (E) 1350 products.

2. Concession on textile item restricted to 25 % on chapters 51-56, 58-60, &63. Four chapter under the textile sector retained in the negative list (chapters 50,57,61 and 62 ) (TEX) : 528 Products

3. Garments (GAM) covering Chapter 61 & 62 while remaining in negative list, will be given 50 % tariff concession on fixed basis, subject to an annual restriction of eight million pieces, of which six million shall be extended the concession only if made of Indian fabric. On utilization of unrestricted quota, an additional quota of 2 million pieces out of 8 million pieces is permitted. The quota level per category is increased from 1.5 million to 2 million pieces per category per year. (GAM) 223 products

4. 50 % tariffs preference on five tea items, subject to a quota of 15 million Kg. per year (TEA): 5 products.

5. 50 % margin of preference upon coming into force of this agreement on all items, except for those on the negative list. To be phased out of Zero duty in three years. (IR): 2799 products

6. A negative list of items to retained (DI) : 429 products

BY SRI LANKA:

1. Zero duty on about 319 items upon entering into force of the agreement (FI): 319 products.

2. Phasing out of tariffs on item with 50 % margin of preference on 889 products upon coming into force of the agreement, with up to 70% at the end of the 1st year, up to 90 % at the end of 2nd year and 100 % at the end of 3rd year (F II ) 889 Products.

3. For the remaining items, (except for those on the negative list) which is the Residual List, preference would be not less than 35 % before the expiry of three years, 70 % before the expiry of six years and 100 % before the expiry of eight year. (SLR): 2724 products.

4. A negative list (D II): 1180products.

Table 1 presents the main features of the nature of concessions exchanged by India and Sri Lanka.

Granting country

Degree of tariff cut Description of items receiving Tariff Cut

36

INDIA 0 per cent removal of tariff For item in Annexure D of the agreement (negative list)

25 per cent removal of tariff For item in chapters 51-56, 58-60, 63

100 per cent removal of tariff For item in Annexure E of the agreement

50 per cent removal of tariff Up to 15 Mn. Kgs. Of Tea, 2mn. Pieces of garments, and 6 mn. Pieces of garments using Indian fabrics. On utilization of unrestricted quota, an additional quota of 2 millio0n pieces out of 8 million pieces permitted.

50 per cent removal of tariff followed by phased out removal of tariff

Sri Lanka 0 percent removal of tariff For item in Annexure D of the agreement

100 percent removal of tariff For item in Annexure F-1 of agreement

50 percent removal of tariff followed by phased out removal of tariff

For item Annexure F-II of the agreement (the margin will be depend to 70 percent. 90 percent and 100 percent respectively at the end of first, second and third year of the entry into force of the agreement

Residual List For remaining items by not less than 35 % before the expiry of three yeas. 70 percent before the expiry of sixth year and 100 % before the expiry of eight year.

1.7 PLAN OF THE STUDY

37

Analyze how much of the bilateral trade – Both the imports and exports are covered under different categories of concession offered and received y India and Sri Lanka over the past six years viz. 2001-02 to 2007-08.

The afotrementioned anlyses is carried out using national trade statistics of both the partner trading countries , India and Sri Lanka.

RESEARCH MATHODOLOGY

Research design

A research project conducted scientifically has a specific frame work of research from the problem identification to the presentation of the research report. This framework of conducting research is known as research design. A research design is simply a frame work or plan for studies that is used as guide in collecting and analyze the data. It is the blue print that followed in completing a study.

Research can be conducted without research design but it may not solve the problems. Basic objective of the research can not be obtained without a proper design.

Types of research design:

The marketing research designs are classified on the basis of the fundamental objectives of the research. They may be exploratory or conclusive.

1. Exploratory research

Search of secondary data nor literature search Searvy of knowledge persons or Experience survey

2. Conclusive Research

Descriptive research

1. longitudinal study 2. cross sectional study

Experimentation

THE STUDY

38

The study is exploratory in nature, aimed to know about the potential market of Sri Lanka & India.

THE SAMPLE The sample is the 5 years Data

TOOLS FOR DATA COLLECTION

All the information related to this project will be collected from secondary data such as website:-

Www.Commerce.nic.in www.doc.gov

TOOLS FOR DATA ANALYSIS

For the purpose of data analysis trend analysis will be conducted. Trend analysis is a component of time series. Time series analysis is used to detect the pattern of change in spastically information over regular interval of time, which is used to project the future trend. Thus time series analysis helps to cope up with uncertainty about the future. Trend analysis shows the long term direction of the series.

THE PLAN

Before research a plan was made for, getting result. The work was divided and planned as follows:Plan for the day were chalked out with the help of data base.

UNIT -2EXPORTER / IMPORTER LIST

39

1.AHMEDABAD STRIP PVT. LTD. Phone : 00-91-79-27541332/30070141/91-2764-281403Fax91-79-27543387/91-2764-281414Address: Line1 604 SARAP Complex, Opp. Navjivan Press,Nr. Gujarat Vidyapith, P.O. Navjivan, City AHMEDABADState : GUJARATCountry IndiaZi p/Postal Code380014Website: www.ahmedabadstrips.com

2,NATIONAL CLOTHING SUPPLY (INDIA) PVT. LTD.Address : 6, Madan Street, Calcutta- 700072Phone: + 91-33-2372709, Fax: + 91-33-2362446Description : MANUFACTURERS & EXPORTERS OF CHILDREN GARMENTS, ( BABA SUITS AND T. SHIRTS) BRAND NAME “ GARBO”E-mail: nationaclothing@hotmail.com

3,Kashmir Walnut Group Exporters of Dry Fruits and Nuts like Walnut Kernels, Inshell Walnuts, Dried Mushrooms (morels), Almonds and Walnut Shells Grit Also. Key Features Two Facilities, Laser Sorter, Vacuum 250g to 5kg, Cold Storage & Automated Packaging.Address :Talab Tillo, Bohri,, kashmir, Jammu & KashmirPhone(s) : 91-191-2505735  Fax(s) : 91-191-2505543

4, Elix Exports)exporters of agriculture products like fruits, vegetables, food grains, mango, oil seed, banana, mustard, tomato, bottle gourd, pumpkin, beetroot, radish, cabbage, tommato, basmati rice, maize, coconut, garlic, ginger, grapes, litchi, muskmelon, watermelon, patato, onion, lady finger, pineapple, orange, capsicum, cauliflower, spices, pickle, jam, jelly, fruit juices and dryfruits.Address :H.O. Chitragupata Nagar, Bargai, PO. Bariatu, Ranchi, JharkhandPhone(s) : 91-O651-2547785  Mobile : +91-9891319483/ 9334488958  Reliance : +91-9334726488  Fax(s) : 91-0651-2547785

5, Thar Marbles P. Ltd Exporters of Natural Stones, Onyx Pink Marble, Green Marble, Pink Marble, Yellow Marble, Marble, Rainforest Brown Marble, Rainforest Green Marble, Onyx Green Marble, Rainforest Golden Marble, Sandstones, Granite, Pebbles, Handicrafts, Agglomerated Marble and Wood Stones. Address :Makrana Road, Madangang, kishan gargh, RajasthanPhone(s) : 91-1463-251545  Mobile : 98296-66666  Fax(s) : 91-1463-250545

6, Dargan Machines & Metals Pvt. Ltd.

40

Importers of Metal Scrap such as Iron Scrap, Steel Scrap, Hms, Cast Iron Etc.Address :Hd-3, Pitampura, DelhiPhone(s) : 91-11-27313500  Mobile : 9999846551  Fax(s) : 91-11-27313600

7, Akshar International Exporters from india of agricultural product like cashew nut, basmati rice, salt, sesame seeds etc.Address :201, 2nd Floor, Above Punjab Radiators,, Gandhidham, GujaratPhone(s) : 91-2836-230609  Mobile : +91 90990 29791

8, V.N. TRADERS PVT LTDExporters of agricultural products like johar, bajra, rice, wheat, soybean meal, guar gum, spices, salt like organic salt, inorganic salt, black salt, iodized salt, edible salt, sea salt, chemicals, marbles, granite, hydrated lime and lignite etc.Address :5/17 Sevak Baidya Street, Kolkata, West BengalPhone(s) : 91-0297-24760236  Mobile : +91-9830011580/ 9836864808  Fax(s) : 91-0297-2225127

9, Neel Agrotech Pvt. Ltd. Exporters of Agro Products, Dehydrated Vegetables, Canned Vegetables, Foods, Aceptic Foods, Spices, Seasonings, Sesame Seeds, Cumin Seed, Peanuts, Pickles and Chutneys.Address :S/3, Navrang, Swastik Cross Road,, Ahmedabad, GujaratPhone(s) : 91-79-26568012  Mobile : +91-9898019869  Fax(s) : 91-79-26409327

10,Desai & Desai International Inc. Exporters of Salwar Kameez, Churidar Suits, Ladies Kurti, Designer Saree, Textile Machinery and Textile Machinery Spare Part.Address :B 43, New Nikita Park, Bh. Sun N Step Club, Thaltej, Ahmedabad, GujaratPhone(s) : 91-79-9825017300  Mobile : 0091-9825017300

11, RK TEXTILE SERVICES Exporters of Fabrics, Men Readymade Garments, Women Readymade Garments, Home Textiles and Textile Machinery.Address :4037, Jash Textile Market, Ring Road, Surat, GujaratPhone(s) : 91-261-3913506  Reliance : +91-9374710506  Fax(s) : 91-261-3913506

12, Sks Rice Overseas Pvt. Ltd. Importers of Basmati Rice, White Sella Rice, Golden Sella Rice, Basmati Raw Rice, Basmati Steam Rice, 1121 Basmati White Sella Rice, 1121 Basmati Golden Sella Rice, Non Basmati Rice, Sarbati Rice, Sugandha Rice, Sabnam Rice, Rh10 Rice, Permal Rice, Pyar Rice Etc.Address :461, First Floor, New Grain Market, G.t.road, Karnal, HaryanaPhone(s) : 91-184-2221110  Mobile : +91-9991101000 / 9215533077  Fax(s) : 91-184-2221110

13,Devine Herbals Pvt. Ltd.)

41

Importers of Herbal Tea, Stevia Rebaudiana, Medicinal Plant and Safed Musli.

14, Rajesh Tea Estate Co.pvt. Wholesale Suppliers of Ctc Tea, Orthodox Tea, Derjeeling Tea and Packed Tea.Address :12,Bbd Bag East Kolkata 700 001, West Bengaljanta Limited ( Jignesh Patel )Importers of Black Tea and Ctc Tea

15, GOLGHA EXPORTS &ENTERPRISES ( MR. CHANDRAKANT )FINEST INDIAN ORTHODOX & CTC TEA PACKED IN(ENTITEA BRAND) 100g, 250g 500g AND BULK PACKING(MEMBER OF ALL THE AUCTION CENTERS)Address :287, RANGAI GOWDER STREET,, COIMBATORE, Tamil Nadu

16,TERAI TEA COMPANY LTDWe have seven tea gardens North India, One in Darjeeling, Namely Chon tong T.E., we are manufacturing Darjeeling Tea, CTC, Orthodox & Green tea. want positive buyer who wish to import tea from India.Address: 11, GOVT. PLACE (EAST),, CALCUTTA, West Bengal

17, Asmitha Traders Exporters of all Kinds of Coconut Related Stuff, Coffee, Pepper.Address :429, 8th C Main, 1st Block, Kalyan Nagar, Hrbr Layout, Bangalore, Karnataka

UNIT -3 Future trend

42

Categories 2009-08 2009-10 2010-11 2011-12 2012-13Bilateral total imports (USD)

1478341.7 1589814.4 1701287.7 18127161 18225815

Negative list 7.73 9.68 11.63 13.58 14.73Zero duty FI 46.00 49.54 53.08 56.62 59.85Residual : SLR 58.28 57.17 56.06 54.95 52.95Tea 8.92 9.73 10.47 11.21 11.96Textile 4.23 4.45 4.66 4.87 5.90Garments 0.70 0.75 0.80 0.85 0.90

TREND ANALYSIS

TOTAL EXPORT & IMPORT

Year Value Trend Value

2001-02 20560.65 -14814.51

2002-03 32134.17 31906.10

2003-04 43955.28 78626.71

2004-05. 170019.05 1722067.94

2005-06 255768.08 218788.55

2006-07 240653.07 265509.16

2007 -08 162,983.90 131,126.62

2008-09 - 358950.38

2009-10 - 405670.99

2010-11 - 452391.60

2011-12 - 4625712.63

43

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

trend value

value

Department of CommerceExport Import Data Bank

Country - wise

Dated: 22/7/2009 Values in US$ Million

Country:  SRI LANKA DSR

44

S.No. \Year2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

1. EXPORT 1,319.20 1,413.18 2,024.67 2,253.82 2,826.54

2. %Growth   7.12 43.27 11.32 25.41

3. India's Total Export 63,842.55 83,535.95 103,090.54 126,262.67 162,983.90

4. %Growth   30.85 23.41 22.48 29.08

5. %Share 2.07 1.69 1.96 1.79 1.73

6. IMPORT 194.74 378.40 577.70 470.26 631.42

7. %Growth   94.31 52.67 -18.60 34.27

8. India's Total Import 78,149.11 111,517.44 149,165.73 185,604.10 251,562.26

9. %Growth   42.70 33.76 24.43 35.54

10. %Share 0.25 0.34 0.39 0.25 0.25

11. TOTAL TRADE 1,513.93 1,791.58 2,602.37 2,724.07 3,457.97

12. %Growth   18.34 45.26 4.68 26.94

13. India's Total Trade 141,991.66 195,053.38 252,256.27 311,866.78 414,546.15

14. %Growth   37.37 29.33 23.63 32.92

15. %Share 1.07 0.92 1.03 0.87 0.83

16. TRADE BALANCE 1,124.46 1,034.79 1,446.97 1,783.56 2,195.12

17. India's Trade Balance -14,306.56 -27,981.49 -46,075.20 -59,341.43 -88,578.36

  Exchange rate: (1US$ = Rs.) 45.9516 44.9315 44.2735 45.2849 40.2410

Note:The country's total imports since 2000-2001 does not include import of Petroleum Products (27100093) and Crude Oil (27090000)

Department of CommerceExport Import Data Bank

Export :: Country-wise

45

Dated: 22/7/2009Values in US$ Million

S.No. Country 2007-2008 %Share

2008-2009(Apr-

Dec) %Share %Growth

1. AFGHANISTAN TIS 248.98 0.1528 286.19 0.2183  

2. ALBANIA 6.97 0.0043 9.76 0.0074  

3. ALGERIA 377.10 0.2314 429.65 0.3277  

4. AMERI SAMOA 0.20 0.0001 0.11 0.0001  

5. ANDORRA 0.13 0.0001 0.92 0.0007  

6. ANGOLA 263.48 0.1617 259.39 0.1978  

7. ANGUILLA 0.17 0.0001 0.03 0.0000  

8. ANTARTICA 0.42 0.0003      

9. ANTIGUA 1.86 0.0011 2.63 0.0020  

10. ARGENTINA 289.68 0.1777 303.49 0.2314  

11. ARMENIA 19.85 0.0122 17.37 0.0132  

12. ARUBA 0.67 0.0004 1.39 0.0011  

13. AUSTRALIA 1,150.60 0.7060 1,023.77 0.7808  

14. AUSTRIA 183.21 0.1124 441.84 0.3370  

15. AZERBAIJAN 25.77 0.0158 22.35 0.0170  

16. BAHAMAS 17.57 0.0108 1.93 0.0015  

17. BAHARAIN IS 251.82 0.1545 212.78 0.1623  

18. BANGLADESH PR 2,918.22 1.7905 1,997.96 1.5237  

19. BARBADOS 2.52 0.0015 3.14 0.0024  

20. BELARUS 21.19 0.0130 23.38 0.0178  

21. BELGIUM 4,210.41 2.5833 3,466.39 2.6435  

22. BELIZE 6.13 0.0038 2.54 0.0019  

23. BENIN 275.45 0.1690 158.98 0.1212  

24. BERMUDA 1.25 0.0008 0.41 0.0003  

25. BHUTAN 86.69 0.0532 80.92 0.0617  

26. BOLIVIA 7.61 0.0047 7.57 0.0058  

27. BOSNIA-HRZGOVIN 5.03 0.0031 3.77 0.0029  

28. BOTSWANA 16.93 0.0104 18.74 0.0143  

29. BR VIRGN IS 0.43 0.0003 0.29 0.0002  

46

30. BRAZIL 2,517.78 1.5448 2,353.26 1.7946  

31. BRUNEI 10.45 0.0064 13.55 0.0103  

32. BULGARIA 71.30 0.0437 59.32 0.0452  

33. BURKINA FASO 32.32 0.0198 39.41 0.0301  

34. BURUNDI 8.05 0.0049 10.24 0.0078  

35. C AFRI REP 1.31 0.0008 1.80 0.0014  

36. CAMBODIA 53.45 0.0328 35.94 0.0274  

37. CAMEROON 72.64 0.0446 74.74 0.0570  

38. CANADA 1,265.87 0.7767 1,007.59 0.7684  

39. CANARY IS 0.04 0.0000      

40. CAPE VERDE IS 0.42 0.0003 0.28 0.0002  

41. CAYMAN IS 0.64 0.0004 0.50 0.0004  

42. CHAD 13.09 0.0080 14.39 0.0110  

43. CHANNEL IS 0.22 0.0001 0.00 0.0000  

44. CHILE 249.61 0.1531 333.76 0.2545  

45. CHINA P RP 10,834.08 6.6473 6,126.00 4.6718  

46. CHRISTMAS IS. 2.30 0.0014 0.16 0.0001  

47. COCOS IS 0.09 0.0001 0.00 0.0000  

48. COLOMBIA 757.70 0.4649 290.09 0.2212  

49. COMOROS 9.74 0.0060 11.03 0.0084  

50. CONGO D. REP. 4.19 0.0026 2.88 0.0022  

51. CONGO P REP 151.10 0.0927 165.44 0.1262  

52. COOK IS 0.12 0.0001 0.08 0.0001  

53. COSTA RICA 31.67 0.0194 29.96 0.0228  

54. COTE D' IVOIRE 258.80 0.1588 71.30 0.0544  

55. CROATIA 72.45 0.0445 65.43 0.0499  

56. CUBA 19.14 0.0117 30.80 0.0235  

57. CYPRUS 47.91 0.0294 140.61 0.1072  

58. CZECH REPUBLIC 180.36 0.1107 141.58 0.1080  

59. DENMARK 496.14 0.3044 410.88 0.3133  

60. DJIBOUTI 457.93 0.2810 300.35 0.2291  

61. DOMINIC REP 42.52 0.0261 39.09 0.0298  

62. DOMINICA 2.94 0.0018 1.88 0.0014  

47

63. ECUADOR 55.40 0.0340 76.56 0.0584  

64. EGYPT A RP 1,396.91 0.8571 1,309.95 0.9990  

65. EL SALVADOR 12.13 0.0074 13.44 0.0102  

66. EQUTL GUINEA 11.05 0.0068 4.84 0.0037  

67. ERITREA 110.66 0.0679 15.21 0.0116  

68. ESTONIA 69.80 0.0428 36.53 0.0279  

69. ETHIOPIA 197.76 0.1213 157.03 0.1198  

70. FALKLAND IS 0.06 0.0000 0.10 0.0001  

71. FAROE IS. 0.24 0.0001 0.05 0.0000  

72. FIJI IS 48.28 0.0296 80.95 0.0617  

73. FINLAND 239.60 0.1470 196.65 0.1500  

74. FR GUIANA 2.21 0.0014 38.31 0.0292  

75. FR POLYNESIA 2.05 0.0013 1.07 0.0008  

76. FR S ANT TR 0.01 0.0000 0.00 0.0000  

77. FRANCE 2,597.89 1.5940 2,175.34 1.6590  

78. GABON 25.86 0.0159 15.50 0.0118  

79. GAMBIA 30.28 0.0186 20.71 0.0158  

80. GEORGIA 92.95 0.0570 63.94 0.0488  

81. GERMANY 5,118.89 3.1407 4,369.54 3.3323  

82. GHANA 807.54 0.4955 430.64 0.3284  

83. GIBRALTAR 1.29 0.0008 8.04 0.0061  

84. GREECE 530.95 0.3258 563.96 0.4301  

85. GREENLAND 0.06 0.0000 0.00 0.0000  

86. GRENADA 1.25 0.0008 0.41 0.0003  

87. GUADELOUPE 1.55 0.0010 1.43 0.0011  

88. GUAM 0.58 0.0004 0.43 0.0003  

89. GUATEMALA 74.65 0.0458 64.06 0.0489  

90. GUINEA 130.58 0.0801 61.97 0.0473  

91. GUINEA BISSAU 4.47 0.0027 1.18 0.0009  

92. GUYANA 13.61 0.0083 9.87 0.0075  

93. HAITI 26.71 0.0164 34.95 0.0267  

94. HEARD MACDONALD 0.01 0.0000      

95. HONDURAS 95.23 0.0584 55.42 0.0423  

48

96. HONG KONG 6,308.31 3.8705 4,868.40 3.7128  

97. HUNGARY 229.78 0.1410 239.92 0.1830  

98. ICELAND 13.77 0.0084 10.07 0.0077  

99. INDONESIA 2,160.18 1.3254 1,816.07 1.3850  

100. IRAN 1,949.46 1.1961 1,992.39 1.5194  

101. IRAQ 271.19 0.1664 268.55 0.2048  

102. IRELAND 314.14 0.1927 324.54 0.2475  

103. ISRAEL 1,603.69 0.9840 1,153.04 0.8793  

104. ITALY 3,913.45 2.4011 2,845.95 2.1704  

105. JAMAICA 24.68 0.0151 17.27 0.0132  

106. JAPAN 3,855.67 2.3657 2,266.00 1.7281  

107. JORDAN 357.35 0.2193 312.17 0.2381  

108. KAZAKHSTAN 111.91 0.0687 98.68 0.0753  

109. KENYA 1,579.51 0.9691 1,094.57 0.8347  

110. KIRIBATI REP 0.18 0.0001 0.15 0.0001  

111. KOREA DP RP 850.92 0.5221 871.64 0.6647  

112. KOREA RP 2,853.19 1.7506 2,628.17 2.0043  

113. KUWAIT 682.12 0.4185 603.85 0.4605  

114. KYRGHYZSTAN 31.58 0.0194 17.21 0.0131  

115. LAO PD RP 3.83 0.0024 3.62 0.0028  

116. LATVIA 59.44 0.0365 35.24 0.0269  

117. LEBANON 96.59 0.0593 96.53 0.0736  

118. LESOTHO 8.53 0.0052 31.66 0.0241  

119. LIBERIA 22.97 0.0141 19.17 0.0146  

120. LIBYA 135.48 0.0831 76.45 0.0583  

121. LIECHTENSTEIN 0.18 0.0001 4.61 0.0035  

122. LITHUANIA 59.09 0.0363 46.23 0.0353  

123. LUXEMBOURG 11.67 0.0072 9.34 0.0071  

124. MACAO 4.47 0.0027 5.23 0.0040  

125. MACEDONIA 8.31 0.0051 8.53 0.0065  

126. MADAGASCAR 57.19 0.0351 232.70 0.1775  

127. MALAWI 64.23 0.0394 63.19 0.0482  

128. MALAYSIA 2,568.84 1.5761 2,027.95 1.5466  

49

129. MALDIVES 89.60 0.0550 80.26 0.0612  

130. MALI 32.26 0.0198 28.83 0.0220  

131. MALTA 34.45 0.0211 60.22 0.0459  

132. MARSHALL ISLAND 0.09 0.0001 0.00 0.0000  

133. MARTINIQUE 1.98 0.0012 42.10 0.0321  

134. MAURITANIA 28.80 0.0177 25.26 0.0193  

135. MAURITIUS 1,086.57 0.6667 874.15 0.6666  

136. MEXICO 591.95 0.3632 515.05 0.3928  

137. MICRONESIA 0.05 0.0000 0.02 0.0000  

138. MOLDOVA 7.41 0.0045 5.13 0.0039  

139. MONACO 0.49 0.0003 0.16 0.0001  

140. MONGOLIA 7.58 0.0047 10.01 0.0076  

141. MONTSERRAT 0.07 0.0000 0.08 0.0001  

142. MOROCCO 208.11 0.1277 171.26 0.1306  

143. MOZAMBIQUE 446.04 0.2737 336.16 0.2564  

144. MYANMAR 185.43 0.1138 173.28 0.1321  

145. N. MARIANA IS. 0.09 0.0001 0.38 0.0003  

146. NAMIBIA 41.05 0.0252 79.25 0.0604  

147. NAURU RP 0.07 0.0000 0.05 0.0000  

148. NEPAL 1,506.79 0.9245 1,202.23 0.9168  

149. NETHERLAND 5,228.12 3.2077 4,817.10 3.6736  

150. NETHERLANDANTIL 10.15 0.0062 11.55 0.0088  

151. NEUTRAL ZONE 25.34 0.0156 0.01 0.0000  

152. NEW CALEDONIA 2.24 0.0014 4.12 0.0031  

153. NEW ZEALAND 158.59 0.0973 146.66 0.1118  

154. NICARAGUA 53.47 0.0328 18.16 0.0139  

155. NIGER 47.47 0.0291 20.55 0.0157  

156. NIGERIA 1,083.87 0.6650 1,049.05 0.8000  

157. NIUE IS 0.01 0.0000 0.01 0.0000  

158. NORFOLK IS 0.48 0.0003 0.36 0.0003  

159. NORWAY 264.18 0.1621 290.22 0.2213  

160. OMAN 937.75 0.5754 602.02 0.4591  

161. PACIFIC IS     0.00 0.0000  

50

162. PAKISTAN IR 1,945.12 1.1934 1,084.30 0.8269  

163. PALAU 0.16 0.0001 0.22 0.0002  

164. PANAMA C Z 0.66 0.0004 0.61 0.0005  

165. PANAMA REPUBLIC 68.44 0.0420 74.28 0.0566  

166. PAPUA N GNA 14.74 0.0090 14.43 0.0110  

167. PARAGUAY 46.54 0.0286 35.66 0.0272  

168. PERU 286.99 0.1761 263.75 0.2011  

169. PHILIPPINES 618.95 0.3798 574.22 0.4379  

170. PITCAIRN IS. 0.03 0.0000 0.01 0.0000  

171. POLAND 447.21 0.2744 385.40 0.2939  

172. PORTUGAL 494.91 0.3037 348.81 0.2660  

173. PUERTO RICO 35.25 0.0216 42.38 0.0323  

174. QATAR 538.13 0.3302 519.01 0.3958  

175. REUNION 33.35 0.0205 26.97 0.0206  

176. ROMANIA 263.40 0.1616 252.12 0.1923  

177. RUSSIA 940.20 0.5769 805.44 0.6142  

178. RWANDA 12.92 0.0079 18.44 0.0141  

179. SAHARWI A.DM RP 0.01 0.0000 0.04 0.0000  

180. SAMOA 0.43 0.0003 0.39 0.0003  

181. SAO TOME 1.48 0.0009 0.75 0.0006  

182. SAUDI ARAB 3,708.30 2.2753 4,092.40 3.1210  

183. SENEGAL 198.03 0.1215 102.52 0.0782  

184. SEYCHELLES 71.79 0.0440 87.14 0.0665  

185. SIERRA LEONE 30.12 0.0185 35.25 0.0269  

186. SINGAPORE 7,371.15 4.5226 6,556.70 5.0003  

187. SLOVAK REP 47.73 0.0293 27.95 0.0213  

188. SLOVENIA 119.48 0.0733 121.68 0.0928  

189. SOLOMON IS 27.89 0.0171 0.55 0.0004  

190. SOMALIA 121.50 0.0745 63.75 0.0486  

191. SOUTH AFRICA 2,658.67 1.6312 1,557.02 1.1874  

192. SPAIN 2,292.45 1.4065 1,978.12 1.5086  

193. SRI LANKA DSR 2,826.54 1.7342 2,007.39 1.5309  

194. ST HELENA 1.62 0.0010 0.19 0.0001  

51

195. ST KITT N A 0.54 0.0003 0.54 0.0004  

196. ST LUCIA 0.54 0.0003 0.93 0.0007  

197. ST PIERRE 5.48 0.0034 0.00 0.0000  

198. ST VINCENT 0.47 0.0003 0.73 0.0006  

199. SUDAN 407.97 0.2503 332.88 0.2539  

200. SURINAME 11.26 0.0069 6.95 0.0053  

201. SWAZILAND 10.35 0.0063 10.63 0.0081  

202. SWEDEN 543.77 0.3336 420.60 0.3208  

203. SWITZERLAND 615.28 0.3775 506.73 0.3864  

204. SYRIA 673.22 0.4131 276.34 0.2107  

205. TAIWAN 1,735.78 1.0650 1,298.23 0.9901  

206. TAJIKISTAN 12.42 0.0076 13.33 0.0102  

207. TANZANIA REP 587.60 0.3605 849.73 0.6480  

208. THAILAND 1,808.79 1.1098 1,441.31 1.0992  

209. TIMOR LESTE 0.40 0.0002 0.56 0.0004  

210. TOGO 229.45 0.1408 111.08 0.0847  

211. TOKELAU IS 0.05 0.0000 0.04 0.0000  

212. TONGA 0.34 0.0002 0.25 0.0002  

213. TRINIDAD 136.09 0.0835 256.74 0.1958  

214. TUNISIA 124.23 0.0762 126.79 0.0967  

215. TURKEY 1,750.30 1.0739 1,158.44 0.8835  

216. TURKMENISTAN 36.08 0.0221 31.85 0.0243  

217. TURKS C IS 0.83 0.0005 0.39 0.0003  

218. TUVALU 6.52 0.0040 0.46 0.0004  

219. U ARAB EMTS 15,634.56 9.5927 14,614.96 11.1457  

220. U K 6,701.49 4.1118 4,687.55 3.5748  

221. U S A 20,722.17 12.7142 15,711.91 11.9822  

222. UGANDA 153.72 0.0943 140.57 0.1072  

223. UKRAINE 398.80 0.2447 335.69 0.2560  

224. UNION OF SERBIA & MONTENEGRO

13.35 0.0082 11.44 0.0087  

225. UNSPECIFIED 364.74 0.2238 571.60 0.4359  

226. URUGUAY 50.80 0.0312 56.30 0.0429  

227. UZBEKISTAN 40.32 0.0247 34.18 0.0261  

52

228. VANUATU REP 2.16 0.0013 2.21 0.0017  

229. VENEZUELA 143.59 0.0881 118.31 0.0902  

230. VIETNAM SOC REP 1,603.16 0.9836 1,134.45 0.8652  

231. VIRGIN IS US 1.13 0.0007 1.06 0.0008  

232. WALLIS F IS 0.05 0.0000 0.16 0.0001  

233. YEMEN REPUBLC 1,018.04 0.6246 639.89 0.4880  

234. ZAMBIA 132.27 0.0812 78.74 0.0600  

235. ZIMBABWE 31.91 0.0196 53.25 0.0406  

  India's Total Export 162,983.90   131,126.62    

Exchange rate:2007-2008: 1US$ = Rs. 40.2410 2008-2009(Apr - Dec) : 1 US$ = Rs. 44.7329

Unit-4

MAJOR FACTORS AFFECTING THE EXPORT/ IMPORT

4.1 Poltical factor

All countries have their own political systems and legal frame work that affect business.

These laws relate to hiring and firing of native employee. Exporting of certain percentage

of products in order to earn foreign exchange. These laws may provide and an

opportunity or pose a threat to the businesses going abroad. Major world political and

legal trends also influence the businesses going across the national boundaries. During

1980s and 1990s many governments in the world tended towards market economics and

privatized the public sector and reduced the government control over business. Hence the

world political and legal environment provided opportunities for business to grow

internationally.

Several other factors that affect the currency stability are some political factors like

change in the government set up, introduction of new export and import policies, tax rates

and many more.

53

Garment workers often have to labor under poor conditions. Mass-produced clothing is

often manufactured in Sweatshop conditions, typified by long work hours, lack of

benefits, and lack of worker representation. While most sweatshops are found in

developing countries, clothes made in industrialized nations may also be manufactured in

sweatshops, most often staffed by undocumented immigrants.

4.2 .Economic Factors:-

The economic factors involved in any fisheries management measure will always require

their own detailed analysis using tools specifically designed for economic analysis.

However, sociological analysis also has to look at the influence and interaction of

economic and sociological issues as there are many ways in which these areas are closely

linked and sometimes difficult to separate.

Growing economic activities, increasing gross national product and per capita income are

indicators of opportunities for business. Contractions in economic activities, reduction in

incomes are indicators for threats for business. The challenging international economic

variables for strategists are interest rates, inflation rates and foreign exchange rates, High

inflation rates and devaluation of currencies pose threats to international business.

4.3Technological Factor

Technology plays a major role in global business. Technology one of the main bases for

joint ventures particularly in developing world, Manufacturing companies in

technologically advanced countries locate their production plants in developing countries

where the cheap labour and raw materials are available . developing countries generally

welcome such companies. The benefits to developing countries from such companies

include. Influx of financial resources. Employment opportunities for native people.

Creation of an opportunity to the domestic manufacturers to acquire new technologies,

opportunity for workforce to acquire new skills through training. Increase in revenue to

the government and the like, As such most of the newly industrializing nations like India.

Singapore, south Korea. Brazil and Spain invite foreign companies. The Benefit to

Technologically advanced firms going to the newly industrializing nations includes low

54

cost of production, business growth, exports to the third nations, increase in profits and

corporate leadership.

4.4 Social Factors:

Religious clothing might be considered a special case of occupational clothing.

Sometimes it is worn only during the performance of religious ceremonies. However, it

may also be worn everyday as a marker for special religious status.

For example, Jains wear unstitched cloth pieces when performing religious ceremonies.

The unstitched cloth signifies unified and complete devotion to the task at hand, with no

digression.[citation needed].Sikhs wear a turban as it is a part of their religion.

The cleanliness of religious dresses in Eastern Religions like Hinduism,Sikhism,

Buddhism and Jainism is of paramount importance, which indicates purity.

Clothing figures prominently in the Bible where it appears in numerous contexts, the

more prominent ones being: the story of Adam and Eve, Joseph's cloak, Judah and

Tamar, Mordechai and Esther. Furthermore the priests officiating in the Temple had very

specific garments, the lack of which would make one liable to death.

Jewish ritual also requires rending of one's upper garment as a sign of mourning. This

practice is found in the Bible when Jacob hears of the apparent death of his son Joseph

Indian Economy Overview

The rural India growth story

The Indian growth story is spreading to the rural and semi-urban areas as well. The next

phase of growth is expected to come from rural markets with rural India accounting for

almost half of the domestic retail market, valued over US$ 300 billion. Rural India is set

to witness an economic boom, with per capita income having grown by 50 per cent over

55

the last 10 years, mainly on account of rising commodity prices and improved

productivity. Development of basic infrastructure, generation of employment guarantee

schemes, better information services and access to funding are also bringing prosperity to

rural households.

Per Capita Income

The per capita income in real terms (at 1999-2000 prices) during 2008-09 is likely to

attain a level of US$ 528 as compared to the Quick Estimate for the year 2007-08 of US$

500. The growth rate in per capita income is estimated at 5.6 per cent during 2008-09, as

against the previous year's estimate of 7.6 per cent.

According to the World Fact Book, India is among the world's youngest nations

with a median age of 25 years as compared to 43 in Japan and 36 in USA. Of the

BRIC—Brazil, Russia, India and China—countries, India is projected to stay the

youngest with its working-age population estimated to rise to 70 per cent of the

total demographic by 2030, the largest in the world. India will see 70 million new

entrants to its workforce over the next 5 years.

India has the second largest area of arable land in the world, making it one of the

world's largest food producers—over 200 million tonnes of foodgrains are

produced annually. India is the world's largest producer of milk (100 million

tonnes per annum), sugarcane (315 million tonnes per annum) and tea (930

million kg per annum) and the second largest producer of rice, fruit and

vegetables.

With the largest number of listed companies - 10,000 across 23 stock exchanges,

India has the third largest investor base in the world.

56

India's healthy banking system with a network of 70,000 branches is among the

largest in the world.

According to a study by the McKinsey Global Institute (MGI), India's consumer

market will be the world's fifth largest (from twelfth) in the world by 2025 and

India's middle class will swell by over ten times from its current size of 50 million

to 583 million people by 2025.

Growth potential

Special Economic Zones (SEZs) are set to see major investments after the

straightening out of certain regulatory tangles. The commerce department expects

about 120 SEZs to be operational by 2009-end, up from existing 87.

According to the CII Ernst & Young report titled 'India 2012: Telecom growth

continues,' India's telecom services industry revenues are projected to reach US$

54 billion in 2012, up from US$ 31 billion in 2008. The Indian telecom industry

registered the highest number of subscriber additions at 15.84 million in March

2009, setting a global record.

A McKinsey report, 'The rise of Indian Consumer Market', estimates that the

Indian consumer market is likely to grow four times by 2025, which is currently

valued at US$ 511 billion.

The volume of mergers and acquisitions (M&As) and group restructuring deals in

India witnessed a sharp nine times jump at US$ 2.27 billion during March 2009

against the volume of deals in February 2009, according to a Grant Thornton

report.

57

India ranks among the top 12 producers of manufacturing value added (MVA)—

witnessing an increase of 12.3 per cent in its MVA output in 2005-07 as against

6.9 per cent in 2000-05—according to the United Nations Industrial Development

Organisation (UNIDO).

In textiles, the country is ranked fourth, while in electrical machinery and

apparatus it is ranked fifth. It holds sixth position in the basic metals category;

seventh in chemicals and chemical products; 10th in leather, leather products,

refined petroleum products and nuclear fuel; twelfth in machinery and equipment

and motor vehicles.

In a development slated to enhance India's macroeconomic health as well as

energy security, Reliance Industries (RIL) has commenced natural gas production

from its D-6 block in the Krishna-Godavari (KG) basin.

India has a market value of US$ 270.98 billion in low-carbon and environmental

goods & services (LCEGS). With a 6 per cent share of the US$ 4.32 trillion

global market, the country is tied with Japan at the third position.

Exchange rate used:

1 US Dollar(USD)  = 42.6413 Indian Rupee(INR) As on may 16,2008

1 USD = 47.80115 Indian Rupee (as on 20 may 2009)

Generally speaking an environment includes the air we breathe, the water we

drink, the available business, social and educational infrastructure in the locality , state

and country etc. In the context of business the environment refers to the sum of internal

and external forces operating on an organization. The managers must perforce recognize

the elements, severity and impact of these forces on the organization. They must identify,

evaluate and react to the forces triggered by the external environment.

The successful organization will identify, appraise, and respond to the various

opportunities and threats in its environment.

58

EXTERNAL MACRO ENVIRONMENT

The external macro environment consists of all the outside institutions and forces that

have an actual or potential interest or impact on the organization's ability to achieve its

objectives: competitive, economic, technological, political, legal, demographic, cultural,

and ecosystem. Though no controllable, these forces require a response in order to keep

positive actions with the targeted markets. An organization with an environmental

management perspective takes aggressive actions to affect the forces in its marketing

environment rather than simply watching and reacting to it.

4.5.1. ECONOMIC ENVIRONMENT

The economic environment consists of factors that affect consumer purchasing power and

spending patterns. Economic factors include business cycles, inflation, unemployment,

interest rates

, and income. Changes in major economic variables have a significant impact on the

marketplace. For example, income affects consumer spending which affects sales for

organizations. According to Engel's Laws, as income rises, the percentage of income

spent on food decreases, while the percentage spent on housing remains constant.

4.5.2. TECHNOLOGICAL ENVIRONMENT

The technological environment refers to new technologies, which create new product and

market opportunities. Technological developments are the most manageable

uncontrollable force faced by marketers. Organizations need to be aware of new

technologies in order to turn these advances into opportunities and a competitive edge.

Technology has a tremendous effect on life-styles, consumption patterns, and the

economy. Advances in technology can start new industries, radically alter or destroy

existing industries, and stimulate entirely separate markets. The rapid rate at which

technology changes has forced organizations to quickly adapt in terms of how they

develop, price, distribute, and promote their products.

4.5.3. POLITICAL AND LEGAL ENVIRONMENT

59

Organizations must operate within a framework of governmental regulation and

legislation. Government relationships with organizations encompass subsidies, tariffs,

import quotas, and deregulation of industries.

The political environment includes governmental and special interest groups that

influence and limit various organizations and individuals in a given society.

Organizations hire lobbyists to influence legislation and run advocacy ads that state their

point of view on public issues. Special interest groups have grown in number and power

over the last three decades, putting more constraints on marketers. The public expects

organizations to be ethical and responsible. An example of response by marketers to

special interests is green marketing, the use of recyclable or biodegradable packing

materials as part of marketing strategy.

The major purposes of business legislation include protection of companies from unfair

competition, protection of consumers from unfair business practices and protection of the

interests of society from unbridled business behavior. The legal environment becomes

more complicated as organizations expand globally and face governmental structures

quite different from those within the United States.

4.5.4. DEMOGRAPHIC ENVIRONMENT

Demographics tell marketers who current and potential customers are; where they are;

and how many are likely to buy what the marketer is selling. Demography is the study of

human populations in terms of size, density, location, age, sex, race, occupation, and

other statistics. Changes in the demographic environment can result in significant

opportunities and threats presenting themselves to the organization. Major trends for

marketers in the demographic environment include worldwide explosive population

growth; a changing age, ethnic and educational mix; new types of households; and

geographical shifts in population.

4.5.5. SOCIAL / CULTURAL ENVIRONMENT

60

Social/cultural forces are the most difficult uncontrollable variables to predict. It is

important for marketers to understand and appreciate the cultural values of the

environment in which they operate. The cultural environment is made up of forces that

affect society's basic values, perceptions, preferences, and behaviors. U.S. values and

beliefs include equality, achievement, youthfulness, efficiency, practicality, self-

actualization, freedom, humanitarianism, mastery over the environment, patriotism,

individualism, religious and moral orientation, progress, materialism, social interaction,

conformity, courage, and acceptance of responsibility. Changes in social/cultural

environment affect customer behavior, which affects sales of products. Trends in the

cultural environment include individuals changing their views of themselves, others, and

the world around them and movement toward self-fulfillment, immediate gratification,

and secularism.

IMPORTANCE OF UNDERSTANDING THE ENVIRONMENT

a) Businesses may be doomed to be non starters due to restrictive business environment which may take the form of rigid government laws ( no polluting industry can ever be located in around 50 Km radius of the Taj) , state of competition ( Car manufacturing capacity presently in the country is far in excess of demand) etc.

b) The present and future viability of an enterprise is impacted by the environment - For eg no TV manufacturer can be expected to survive by making only B&W television sets when consumer preference has clearly shifted to colour television sets.

c) The cost of capital and the cost of borrowing - two key financial drivers of any enterprise are impacted by the external environment . For eg the ability of a business to fund its expansion plan by raising money from the stock markets depends on the prevalent public mood towards investment in stock markets.

d) The availability of all key inputs like skilled labour , trained managers , raw materials , electricity , transportation , fuel etc are a factor of the business environment.

e) Increasing public awareness of the negative aspects of certain industries like hand woven carpets ( use of child labour ) , pesticides (damage to environment in the form of chemical residues in groundwater), plastic bags (choking of sewer lines) have resulted in the slow decline of some industries.

f) Finally , the environment offers the opportunities for growth and profits . For eg when

61

the insurance and aviation industry was thrown open to the private sector , the new entrant could easily build on the expectations of the public.

UNIT-5DISCUSSION & INTERPRETATION

1. It was stated that a number of non- tariff, Para-tariff barriers acted as a constraints to exporters in Sri Lanka under ILFTA. In case of food products a number of sanitary and psyto-sanitary samples had to be registered in Delhi under the prevention of food adulteration act under ministry of agriculture. This sometimes took 3-6 months to clear. Other non tariffs barrier included licensing. Customs checks, particularly in case of food products such as biscuits, chocolates, and sausages. This led to holding up of export in ports.

2. It was stated that Sri Lankan exports were permitted only through designated ports in India. All ports in India should be opened up to facilitate Sri Lankan exports to India.

3. The Commercial counselor of India embassy admitted that different ports in India offer different level of transparency. However four nodal points in India ports had been designated to offer all necessary information to exporters. Since Sri Lankan exports of quota item need to be monitored. Not all ports in India were equipped to handle this hence only those capable of such monitoring had to be designated. However in response to the Sri Lankan request for additional ports, the Indian government had agreed to open up additional ports for Sri Lankan exporters. The imposition of quota on Sri Lankan exports is removed for duty free / duty preference entry to India.

4. Considerable concern was expressed regarding the imposition of discriminatory sales tax on Sri Lankan imports by Tamil Nadu government. it was stated that whereas local manufacturer in Tamil Nadu were required to pay 10.5 % sales tax,

62

imposed Sri Lankan products attracted 21 % sales tax. This considerably offset some of the duty preference advantages to Sri Lankan exporters.

5. India had agreed to deepen the specific duty concession on 51 tariff lines on garments from 50- 75 %, the ad valorem rate of 50 % remained and only the higher of the two values ware imposed. This did not benefit Sri Lankan exporters as was intended.

6. It was stated that the valuation was not based on CIF pricing but arbitrary. The port development charges were added to increase custom levies. The rules of origin criteria were also stated to be one of the constraints of Sri Lankan exporters. It was stated that Sri Lanka required more favorable criteria given that it depended quite a lot on imported inputs for its exports. It was suggested that a reduction of local content from 35 % to 15 % be accepted and condition of transformation of at 4-digit HS level be removed.

UNIT-6CONCLUSION

One significant result of our study is that the increase in imports has, on the whole modest trade creation in case of overall Indian imports from Sri Lanka, but considerable trade creation in case Sri Lankan imports from India. Thus trade liberalization under ILFTA has, contrary to normal exceptions, led to overall trade creation.

It is interesting to note that the agreement has induced additional Indian investment in Sri Lanka, thereby strengthening investment trade linkage which is essential to sustain more balanced incremental bilateral trade. The nature of concessions exchanged have been such as to allow the smaller trading partner to benefit more in term of incremental trade by accessing the large Indian market.

In case of ILFTA, the presence of “negative list” for both the countries points to the protective nature of the agreement, in as much as nearly one-tenth of india’s imports and more than one third of India’s exports are preempted from trade liberalization. Unless a time frame is set for removal of items from the negative list, ILFTA as a “Free trade agreement” as term is generally understood, would remain a mirage

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UNIT – 8BIBLOGRAPHY

www.google.com http://www.ris.org.in/pbno2.pdf www.wto.org www.commerce.nic.in www.alibaba.com

BOOKS

International business environment Marketing research

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