Ahead of Prime Minister Narendra Modi’s visit here, India and Sri Lanka have discussed the implementation of a free trade pact and stepping up economic cooperation, while addressing issues of trade imbalance.

Discussions on economic issues were held between the Sri Lankan side and a visiting Indian trade delegation headed by Commerce Secretary Rajeev Kher.

Enhanced Indian investments in Sri Lanka would boost the island nation’s export capacity and promote links with product and supply chains in the Indian market, the Indian trade delegation told Sri Lankan counterparts.

Both sides discussed the implementation of the India-Sri Lankan 1998 Free Trade Agreement, trade, investments, economic cooperation and related issues and upgrading the economic engagement to include investment and services with the Sri Lankan side, the Indian High Commission here said.

Issues pertaining to trade imbalance, and non-tariff barriers were also taken up. Both sides continued the dialogue on moving towards investment-based trade, it said in a statement.

It was agreed that there was considerable potential to expand bilateral trade in a balanced manner through optimal utilisation of the opportunities available between the two economies.

Kher’s visit comes ahead of Prime Minister Modi’s Sri Lanka trip next week.

The parleys also come after talks between Sri Lankan President Maithripala Sirisena and Prime Minister Narendra Modi in New Delhi last month that saw the two countries sign a civil nuclear pact.

During the discussion, the Indian side recalled Sri Lanka’s earlier offer of attracting Indian investments in the manufacture of automobile parts, pharmaceuticals, textiles and engineering products in special economic zones.

The investments could be in the form of joint venture projects to encourage Sri Lankan private sector and state enterprises to work together with Indian enterprises.

Cooperation in the energy sector, including in the field of non-conventional energy, was also discussed.

It was pointed out that Sri Lanka has huge potential in the wind energy sector which could be harnessed.

The talks also focused on interconnectivity of grid between the two countries.

The joint working group on tourism is likely to meet in April 2015.

Both sides noted the importance of connectivity between the two countries and acknowledged that the current levels of connectivity though good needed to be further enhanced to boost tourism.

The meeting also concurred on the importance of early resumption of ferry service between Talaimannar and Rameshwaram and Colombo and Tuticorin, as well as early conclusion of the revised air services agreement, which had been initiated in September 2013, the High Commission said.

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