Lanka-India to conclude CEPA talks soon

India and Sri Lanka will conclude negotiations for a Comprehensive Economic Partnership Agreement (CEPA) by the end of this year. The agreement also provides for opening up the services sector including financial services in both countries.

"We are also considering opening up accounting and legal services, which are relatively easier compared to banking.

For this, we have to arrive at an understanding with the respective regulators of these professions in India," Central Bank Governor Ajith Nivard Cabraal said in New Delhi.

Cabraal said that his Government wants banks to come up with new products such as micro-finance and infrastructure.

New products would be the entry point for foreign banks. The country, which already has a double taxation avoidance treaty with India, has strict controls over ownership of banks with no single group of shareholders allowed to hold more than 15%.

This would be one of the areas for negotiation. There are 24 banks in Sri Lanka, of which 13 are foreign banks. There are four Indian banks in the island nation, where banking service is quite strong in the western province, said Mr Cabraal.

Sri Lanka's exports to India are about $300 million, while its imports from India are $2.5 billion. India is a major market, but customs regulations are slowing down exports to India, said a member of the Sri Lankan delegation to the capital.

Sri Lanka expects retail price inflation based on 1952 consumption pattern to come down to 13% by this year end.

"The actual figure may be much less, which we will come to know after we come out with a new inflation index in November based on 2002 consumption pattern. We expect it to come down to single a digit next year", said Cabraal.

Economic Times, India