Competitiveness of Sri Lankan Tea and Spices in India’s Market

Abstract

India and Sri Lanka have signed the Uruguay Round Agreement on Agriculture (AoA), the South Asian Preferential Trading Agreement (SAPTA) and Indo-Sri Lanka Free Trade Agreement (ISLFTA) to enhance global, regional and bilateral trade during the last decade. In the above context, the study analyzed trends, potentials and prospects o f bilateral trade o f tea and spices between India and Sri Lanka. The revealed comparative advantage (RCA), annual compound growth rates (CGR) and constant market share model (CMS) were the analytical tools. The study found only clove, nutmeg and mace were competitive among agricultural exports o f Sri Lanka while major agricultural exports (tea and pepper) were not competitive in India’s market. I f the trade flow s are properly regulated, trade o f tea and spices between two countries would be complimentary rather than competitive.