The proposed Economic and Technology Cooperation Agreement (ETCA) between India and Sri Lanka is not merely another bilateral trade deal, it is a pivotal opportunity that could redefine the economic trajectory of the island nation. For C-suite leaders in manufacturing, services, technology, and policy planning, understanding the strategic depth of ETCA is vital. It represents more than access to a larger market; it is a gateway to integration with one of the world’s fastest-growing economies and a potential catalyst for Sri Lanka’s transition into a knowledge-based, export-driven regional hub.
India, with a GDP exceeding $3.7 trillion and a population of over 1.4 billion, is not just a neighbor. It is an economic juggernaut investing heavily in digital infrastructure, manufacturing ecosystems, and global service exports. Sri Lanka, in contrast, is navigating a period of economic recovery, facing foreign exchange challenges, and seeking to diversify its narrow export base. ETCA, if designed and implemented with clarity and balance, could provide the structural framework to leverage India’s momentum for Sri Lanka’s benefit. But it requires a clear-headed strategy.
The agreement aims to deepen trade in goods, enable services market access, and promote technology collaboration between the two countries. With India already being Sri Lanka’s largest trading partner in goods and among the top investors, ETCA could formalize and expand these ties in a rules-based, transparent, and mutually beneficial manner. It is worth noting that even without ETCA, bilateral trade in 2023 crossed $6 billion, heavily skewed in India’s favor. The challenge now is to negotiate a framework where Sri Lanka can capitalize on Indian demand without becoming merely an extension of the Indian supply chain.
For Sri Lanka’s exporters, ETCA could open direct entry into Indian states like Tamil Nadu, Kerala, and Karnataka, whose combined consumer markets exceed the size of most ASEAN economies. This could be a game changer for sectors such as food processing, packaging, logistics, light manufacturing, boat building, pharmaceuticals, and wellness products. With appropriate product registration and trade facilitation mechanisms, Sri Lankan brands could finally tap into the Indian middle-class market at scale. However, regulatory harmonization and mutual recognition of standards will be essential to remove hidden trade barriers that have previously hampered Sri Lankan exports to India despite duty-free access.
On the services front, ETCA’s real promise lies in the potential mobility of professionals and partnerships in IT, BPO, education, and maritime logistics. Sri Lanka’s growing IT talent pool could find structured pathways into Indian outsourcing ecosystems, while tech startups could benefit from cross-border venture capital, incubation, and regional scaling. India’s world-class fintech, medtech, and edtech industries present opportunities for knowledge transfer, co-development, and talent exchange, especially if ETCA embeds intellectual property protections and encourages joint R&D ventures.
That said, the concerns from Sri Lankan professional associations and industry chambers are not unfounded. Fears of market flooding, job displacement, and asymmetrical competition must be addressed transparently. India’s economy is significantly larger, and without a strong safeguard mechanism, Sri Lankan SMEs could be outcompeted on pricing, particularly in areas like accounting, software services, and legal advisory. The agreement must therefore include clear timelines, phased implementation, skill recognition standards, and dispute resolution mechanisms to ensure fairness and accountability.
From a strategic standpoint, ETCA also positions Sri Lanka as a critical link in India’s Indo-Pacific economic vision. As India expands its influence across the Indian Ocean region and aligns more closely with the EU, US, and ASEAN markets, Sri Lanka can leverage its geography, port infrastructure, and English-speaking workforce to become a logistics and services hub underpinned by regional supply chains. This could significantly enhance investor confidence, positioning Sri Lanka as a complementary economic partner, not a peripheral player.
Moreover, ETCA could catalyze domestic reform. In preparing for deeper integration, Sri Lanka will be compelled to strengthen regulatory transparency, upgrade infrastructure, and modernize customs, which are essential prerequisites for any form of global competitiveness. These reforms would benefit not only trade with India but also enhance Sri Lanka’s readiness for FTAs with other large economies.
For the C-suite, the question is no longer whether Sri Lanka can afford deeper integration with India, it is whether we can afford not to. The global economy is fragmenting into regional blocs driven by logistics, digital alignment, and supply chain resilience. ETCA offers Sri Lanka a strategic seat at that table. But the opportunity comes with complexity. Negotiations must be driven not just by trade officials but by deep consultation with business leaders, industry experts, and technology stakeholders to ensure that the agreement reflects real-world competitiveness and national interest.
If shaped wisely, ETCA could transform Sri Lanka from a narrow goods trader to a regional services powerhouse. It could unlock access to talent mobility, capital inflow, market expansion, and co-innovation that no domestic stimulus can provide alone. But it must be more than a political agreement. It must be a commercial blueprint, anchored in realistic assessments, measurable goals, and a long-term vision for value creation.
The stakes are high, and the timing is critical. If Sri Lanka can navigate this moment with strategic clarity, ETCA could indeed be the game changer we need, not only for trade but for transforming the structure of our economy. The opportunity is on the table. What remains is how intelligently we choose to seize it.
