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India - Sri Lanka Free Trade Agreement: Sri Lanka reaping the benefits from preferential trade

India - Sri Lanka FTA

The objective of a free trade agreement (FTA) is not to bring about a balance in trade, but to workout a ‘win-win’ situation for both producers and consumers inFTA member countries. In doing so, there can be instances where the trade deficit increases for one partner. For instance, the inflow of necessary consumer goods, machinery and spare parts for industrial activity, and intermediate goods like textiles and oil, to one trading partner can be huge while the supply capacity of the same trading nation may be limited and cannot immediately increase to expand its exports to match the import flow...

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