| Summary/Abstract |
Under the wave of regionalism, India like other developing countries started
to integrate at regional level. At the initial stage, it wanted to establish strong
trade relations with its neighbouring countries. It (India) signed its first free
trade agreement (FTA) with Sri Lanka in 1998, which became operational from
2000. Thereafter, bilateral trade continued to increase with increasing rate. It
is in this context, the present study attempts to explore India’s trade potential
and prospects with Sri Lanka, utilised revealed comparative advantage (RCA) and
trade intensity Index (TII). The results of RCA show that India has strong and
sustainable trade specialisation (RCA > 1) in the export of edible vegetables
and certain roots and tubers, coffee, tea mate and spices, cotton etc to Sri Lanka.
This comparative advantage helps not only to diversify product baskets, but also
lead to increased volume of trade. India has no comparative advantage in the
import of any product from Sri Lanka. India has intensity of trade with Sri Lanka
since 1991. India has sustainable trade potential and prospects with Sri Lanka and
been a net exporter to it. Efforts should be made to utilise this potential.
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