Domestic Legal Barriers to Implementing the Indo-Sri Lanka Free Trade Agreement

DRA ANNUAL INTERNATIONAL CONFERENCE 2024 ON “SOCIO-ECONOMIC TRANSFORMATION: OPPORTUNITIES AND CHALLENGES” Int. Jr. of Contemp. Res. in Multi. PEER-REVIEWED JOURNAL Volume 4 [Special Issue 1] Year 2025 74 © 2025 Meenakshi Yadav, Amisha Singh. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY NC ND).https://creativecommons.org/licenses/by/4.0/ Conference Paper Domestic Legal Barriers to Implementing the Indo-Sri Lanka Free Trade Agreement Meenakshi Yadav 1*, Amisha Singh 2 1 Research Scholar, Department of Political Science, SLAS, Mody University of Science and Technology, Laxmangarh, Sikar, Rajasthan, India 2 Research Scholar, Department of Political Science, SLAS, Mody University of Science and Technology, Laxmangarh, Sikar, Rajasthan, India Corresponding Author: *Meenakshi Yadav DOI: https://doi.org/10.5281/zenodo.17942566 Abstract Manuscript Information The Indo-Sri Lanka Free Trade Agreement (ISFTA) aims to boost economic cooperation. However, domestic legal barriers hinder its implementation in both countries. This research examines these obstacles and their impact on trade relations. It analyses constitutional challenges, statutory conflicts, and administrative hurdles in “India and Sri Lanka”. The study employs a comparative approach to identify common and unique barriers. It explores how these legal impediments affect trade volumes and economic growth. The research also considers sectorspecific impacts and investor confidence. Key findings reveal that constitutional power divisions create implementation challenges. Existing trade laws often clash with ISFTA provisions, causing regulatory conflicts. Bureaucratic inefficiencies and lack of institutional capacity further complicate matters. The paper proposes legal reforms and enhanced bilateral cooperation as potential solutions. It suggests harmonising domestic laws with ISFTA provisions to facilitate smoother implementation. The research contributes to understanding the complex interplay between domestic legal systems and international trade agreements. It offers valuable insights for policymakers and trade negotiators in both countries. The findings have broader implications for regional economic integration in South Asia. ▪ ISSN No: 2583-7397 ▪ Received: 12-12-2024 ▪ Accepted: 24-02-2025 ▪ Published: 18-03-2025 ▪ IJCRM:4(SP1); 2025: 74-80 ▪ ©2025, All Rights Reserved ▪ Plagiarism Checked: Yes ▪ Peer Review Process: Yes How to Cite this Article Yadav M, Singh A. Domestic Legal Barriers to Implementing the Indo-Sri Lanka Free Trade Agreement. Int J Contemp Res Multidiscip. 2025;4(SP1):74-80. Access this Article Online www.multiarticlesjournal.com KEYWORDS: Indo-Sri Lanka Free Trade Agreement, domestic legal barriers, trade law, international trade, economic cooperation, legal harmonisation DRA ANNUAL INTERNATIONAL CONFERENCE 2024 ON “SOCIO-ECONOMIC TRANSFORMATION: OPPORTUNITIES AND CHALLENGES” Int. Jr. of Contemp. Res. in Multi. PEER-REVIEWED JOURNAL Volume 4 [Special Issue 1] Year 2025 75 © 2025 Meenakshi Yadav, Amisha Singh. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY NC ND).https://creativecommons.org/licenses/by/4.0/ INTRODUCTION A. Background of the “Indo-Sri Lanka Free Trade Agreement (ISFTA)” “The Indo-Sri Lanka Free Trade Agreement (ISFTA) represents a milestone in South Asian economic cooperation, signed on December 28, 1998, and implemented on March 1, 2000 [1]. This bilateral agreement aimed to foster stronger economic ties between India and Sri Lanka, two nations with historically deep cultural and economic connections. The ISFTA's primary objective was to enhance trade relations by reducing tariffs and eliminating trade barriers, thereby creating a more integrated economic landscape in the region. The agreement's inception was rooted in the recognition of the untapped potential for bilateral trade growth. “Before the ISFTA, trade between India and Sri Lanka was relatively limited, despite their geographical proximity and shared cultural heritage. The agreement sought to address this disparity by providing a structured framework for trade liberalisation. Under the ISFTA, both countries agreed to gradually reduce or eliminate customs duties on a wide range of products. The agreement covered over 4,000 tariff lines, with India offering duty-free access to 1,351 products immediately upon implementation [2]. This progressive reduction of tariffs was designed to occur over a phased period, allowing industries in both countries to adapt to the changing economic landscape. One of the key features of the ISFTA was its asymmetrical nature, recognising the economic disparities between the two nations. India, being the larger economy, offered more concessions to Sri Lanka, aiming to balance trade flows and support Sri Lanka's economic growth. This approach was intended to create a win-win situation, fostering goodwill and mutual economic benefits. The ISFTA also incorporated provisions for “Rules of Origin (ROO) to ensure that the benefits of the agreement accrued to goods genuinely originating from the partner countries”. These rules were designed to prevent third-country products from unfairly benefiting from the preferential treatment offered under the agreement [3]. While the ISFTA marked a significant step towards regional economic integration, its implementation has faced various challenges. These include domestic legal barriers in both countries, which have sometimes “hindered the full realisation of the agreement's potential. Despite these obstacles, the ISFTA has contributed to a substantial increase in bilateral trade volumes and has served as a model for further economic cooperation in the South Asian region” [4]. Research questions 1. What are the primary constitutional and statutory barriers in “India and Sri Lanka” that hinder the effective implementation of the ISFTA? 2. How do administrative and bureaucratic challenges in both countries impact the practical execution of the ISFTA's provisions? 3. To what extent do the interpretation and application of Rules of Origin (ROO) create legal obstacles in realising the ISFTA's goals? 4. What legal reforms and policy measures could potentially address the domestic barriers to ISFTA implementation in both India and Sri Lanka? RESEARCH OBJECTIVES 1. To identify and analyse the key constitutional and statutory provisions in “India and Sri Lanka” that conflict with or impede the implementation of the ISFTA. 2. To examine the administrative structures and bureaucratic processes in both countries, assessing their impact on ISFTA implementation and proposing streamlining measures. 3. To critically evaluate the legal disputes and challenges arising from the interpretation of the Rules of Origin under the ISFTA, and to propose clearer guidelines for consistent application. 4. To develop a comprehensive set of legal and policy recommendations aimed at overcoming the domestic barriers to ISFTA implementation, considering the unique legal landscapes of both India and Sri Lanka. Theoretical Framework A. Overview of free trade agreements (FTAs) “Free Trade Agreements (FTAs)” are cornerstones of modern international economic relations, serving as pivotal instruments in the global push towards trade liberalisation. These bilateral or multilateral treaties aim to reduce or eliminate trade barriers, including tariffs, quotas, and regulatory obstacles, thereby fostering economic integration and mutual prosperity among participating nations [5]. The underlying principle of FTAs is rooted in the economic theory of comparative advantage, which posits that countries benefit by specialising in goods and services they can produce most efficiently. The scope of FTAs has evolved significantly over time, reflecting the changing dynamics of global trade. While early agreements focused primarily on reducing tariffs on goods, contemporary FTAs often encompass a broader range of issues. These may include services trade, intellectual property rights, investment protection, and regulatory cooperation. This expansion in scope reflects the growing complexity of international commerce and the interconnectedness of global economies [6]. One of the key features of FTAs is the concept of preferential treatment. Signatories to an FTA grant each other more favourable trade terms than they extend to non-member countries. This preferential treatment is typically implemented through reduced tariffs, simplified customs procedures, and harmonised regulatory standards. However, to prevent abuse of these preferences, FTAs usually incorporate Rules of Origin (ROO) provisions. These rules ensure that only goods DRA ANNUAL INTERNATIONAL CONFERENCE 2024 ON “SOCIO-ECONOMIC TRANSFORMATION: OPPORTUNITIES AND CHALLENGES” Int. Jr. of Contemp. Res. in Multi. PEER-REVIEWED JOURNAL Volume 4 [Special Issue 1] Year 2025 76 © 2025 Meenakshi Yadav, Amisha Singh. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY NC ND).https://creativecommons.org/licenses/by/4.0/ substantially produced or processed within the FTA zone benefit from the preferential treatment [7]. The legal architecture of FTAs is complex, often requiring significant changes to domestic laws and regulations. This complexity can give rise to implementation challenges, as evidenced in cases like the “NAFTA dispute between Mexico and the United States over cross-border trucking services. In this instance, the conflict between NAFTA provisions and U.S. domestic regulations led to a protracted legal battle, highlighting the potential tensions between international commitments and national legal frameworks [8]. Historical context of Indo-Sri Lanka trade relations In the pre-colonial era, trade between the Indian subcontinent and Sri Lanka (then Ceylon) flourished, primarily centred around spices, textiles, and precious stones. This period saw the development of intricate trade networks that would later form the foundation for more formalised economic ties. The arrival of European colonial powers, particularly the British, in the 18th and 19th centuries, brought significant changes to this dynamic. Under British rule, both India and Ceylon were integrated into a broader imperial economic system, which paradoxically both facilitated and constrained bilateral trade [9]. The post-independence period marked a new chapter in IndoSri Lanka trade relations. Initially, both countries adopted inward-looking economic policies, characterised by import substitution and protectionism. This approach, while aimed at fostering domestic industries, inadvertently limited the scope of bilateral trade. The 1960s and 1970s saw sporadic attempts to enhance economic cooperation, but political tensions and divergent economic strategies often hindered substantial progress [10]. “A significant turning point came in the 1980s with the gradual liberalisation of both economies. Sri Lanka initiated economic reforms in 1977, while India began its liberalisation process in 1991. These shifts created a more conducive environment for bilateral trade expansion. However, it was not until the late 1990s that a concerted effort was made to formalise and strengthen these trade ties [11]. Key provisions of the ISFTA Central to the ISFTA is the phased tariff liberalisation program. This provision outlines a structured approach to reducing or eliminating customs duties on a wide range of products. The agreement categorises goods into immediate zero-duty items, phased reduction items, and negative list items. For India, this meant immediate duty-free access for 1,351 tariff lines upon the agreement's implementation in 2000, with a commitment to progressively reduce tariffs on other items over a period of three years [12]. “The Rules of Origin (ROO) form another crucial component of the ISFTA. These rules define the criteria for determining the national origin of a product, ensuring that only goods substantially produced or processed within the free trade area benefit from preferential treatment. The ISFTA stipulates that to qualify for preferential access, products must have a minimum domestic value addition of 35% if the inputs are sourced from either country, or 25% from the exporting country, with a cumulative 35% from both countries [13]. “A notable feature of the ISFTA is its asymmetrical nature, reflecting the economic disparity between India and Sri Lanka. This provision allows Sri Lanka more extensive market access and longer phase-out periods for tariff reduction, acknowledging the smaller size of its economy. This asymmetry is designed to create a more equitable trading relationship and support Sri Lanka's economic growth [14]. Domestic law and international agreements The interplay between domestic law and international agreements is a complex and often contentious aspect of implementing “free trade agreements like the Indo-Sri Lanka Free Trade Agreement (ISFTA)”. This relationship lies at the heart of many challenges faced in realising the full potential of such bilateral arrangements [15]. At its core, the issue revolves around the principle of state sovereignty and how it intersects with international obligations. Most countries, including India and Sri Lanka, “follow a dualist approach to international law, meaning that international treaties do not automatically become part of domestic law upon ratification. Instead, they require specific legislative action to be incorporated into the national legal framework [16]. This dualist approach can create significant hurdles in implementing international agreements. For instance, provisions of the ISFTA may conflict with existing domestic laws or regulations. In such cases, legislative amendments or new laws may be necessary to align the domestic legal system with the agreement's requirements. This process can be timeconsuming and politically challenging, especially when it involves sensitive sectors or entrenched interests. The situation is further complicated by the different legal traditions and constitutional structures of India and Sri Lanka. India's federal system, for example, divides “legislative powers between the central government and states. Trade falls under the Union List in the Seventh Schedule of the Indian Constitution, giving the central government primary authority. However, implementation often requires cooperation from state governments, potentially creating friction points [17]. Sri Lanka, with its unitary system of government, faces different challenges. While decision-making is more centralised, the country's complex political history and regional dynamics can still impact the implementation of international agreements. The need to balance international commitments with domestic economic priorities often leads to delays or partial implementation of treaty obligations. Analysis of Domestic Legal Barriers in India The analysis of domestic legal barriers in India to implementing the Indo-Sri Lanka Free Trade Agreement (ISFTA) reveals a DRA ANNUAL INTERNATIONAL CONFERENCE 2024 ON “SOCIO-ECONOMIC TRANSFORMATION: OPPORTUNITIES AND CHALLENGES” Int. Jr. of Contemp. Res. in Multi. PEER-REVIEWED JOURNAL Volume 4 [Special Issue 1] Year 2025 77 © 2025 Meenakshi Yadav, Amisha Singh. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY NC ND).https://creativecommons.org/licenses/by/4.0/ complex web of constitutional, statutory, and administrative challenges. These barriers, deeply rooted in India's legal and governance structures, significantly impact the effective execution of the agreement's provisions and highlight the intricate relationship between international commitments and domestic legal frameworks [18]. At the constitutional level, India's federal structure presents a formidable challenge. While the Union government has the authority to enter into international agreements under Article 73 of the Constitution, the implementation often requires cooperation from state governments. This is particularly relevant in areas where the subject matter of the agreement intersects with items on the State List or Concurrent List of the Seventh Schedule [19]. For instance, agricultural trade, a key component of the ISFTA, falls within the purview of state legislatures, potentially creating conflicts between central policy and state-level regulations. “The Supreme Court of India has addressed this issue in several landmark cases. In State of West Bengal v. Union of India, the court held that while the Union has the power to enter into treaties, implementing legislation may be necessary if the treaty affects citizens' rights or requires changes in domestic law. This ruling underscores the need for legislative action to give full effect to international agreements, a process that can be timeconsuming and politically challenging [20]. Statutory obstacles further complicate the implementation of the ISFTA. Existing laws, particularly those related to trade and commerce, may conflict with the agreement's provisions. For example, the “Foreign Trade (Development and Regulation) Act, 1992”, which governs India's foreign trade policy, may contain provisions that are inconsistent with the liberalisation measures required by the ISFTA. Amending these laws to align with the agreement's requirements often faces resistance from various stakeholders, including domestic industries fearing increased competition [21]. Moreover, India's complex regulatory environment poses significant administrative hurdles. The multiplicity of agencies involved in trade-related matters, each with its own set of rules and procedures, can lead to bureaucratic inefficiencies and inconsistencies in implementing the ISFTA. For instance, customs procedures, product standards, and certification requirements may vary across different government departments, creating confusion and delays for businesses seeking to benefit from the agreement [22]. The interpretation and application of the Rules of Origin (ROO) under the ISFTA present another challenge. These rules, designed to ensure that preferential treatment is granted only to goods substantially produced within the free trade area, can be complex and subject to varying interpretations. The Indian judiciary has grappled with ROO-related disputes in cases like Commissioner of Customs, Vishakhapatnam v. Aggarwal Industries Ltd., highlighting the need for clear and consistent application of these rules [23]. Analysis of Domestic Legal Barriers in Sri Lanka “The analysis of domestic legal barriers in Sri Lanka to implementing the Indo-Sri Lanka Free Trade Agreement (ISFTA)” reveals a complex interplay of constitutional, statutory, and administrative challenges. These barriers, rooted in Sri Lanka's unique legal and political landscape, significantly impact the effective execution of the agreement's provisions and highlight the intricate relationship between international commitments and domestic legal frameworks [24]. At the constitutional level, Sri Lanka's unitary system of government presents a different set of challenges compared to India's federal structure. The 1978 Constitution of Sri Lanka vests significant power in the executive presidency, including the authority to enter into international agreements. However, the implementation of such agreements often requires legislative action, which can be a complex process given the country's political dynamics and the need for parliamentary approval [25]. “The doctrine of separation of powers, while not as strictly defined as in some other jurisdictions, still plays a crucial role in Sri Lanka's governance. This can lead to tensions between the executive's power to negotiate international agreements and the legislature's role in enacting and implementing legislation. The Supreme Court of Sri Lanka has addressed this issue in cases like S.C. Reference No. 2/2003, where it emphasised the need for parliamentary oversight in matters of international agreements that significantly impact domestic law [26]. Statutory obstacles further complicate the implementation of the ISFTA. Sri Lanka's existing trade-related laws, many of which predate the agreement, may contain provisions that conflict with the ISFTA's requirements. For instance, the “Imports and Exports (Control) Act, No. 1 of 1969, which governs much of Sri Lanka's external trade, may need substantial amendments to align with the liberalisation measures mandated by the ISFTA. The process of amending these laws can be time-consuming and politically sensitive, particularly when it involves sectors that are traditionally protected or considered strategically important [27]. Moreover, Sri Lanka's complex regulatory environment poses significant administrative hurdles. The multiplicity of agencies involved in trade-related matters, each with its own set of rules and procedures, can lead to bureaucratic inefficiencies and inconsistencies in implementing the ISFTA. For example, the Sri Lanka Standards Institution, the Consumer Affairs Authority, and various sector-specific regulatory bodies may have overlapping or conflicting requirements, creating confusion for businesses seeking to benefit from the agreement [28]. The interpretation and application of Rules of Origin (ROO) under the ISFTA present another challenge in the Sri Lankan context. These rules, crucial for determining which products qualify for preferential treatment, can be complex and subject to varying interpretations. Sri Lankan courts have grappled with ROO-related disputes, as seen in cases like Lanka Mineral DRA ANNUAL INTERNATIONAL CONFERENCE 2024 ON “SOCIO-ECONOMIC TRANSFORMATION: OPPORTUNITIES AND CHALLENGES” Int. Jr. of Contemp. Res. in Multi. PEER-REVIEWED JOURNAL Volume 4 [Special Issue 1] Year 2025 78 © 2025 Meenakshi Yadav, Amisha Singh. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY NC ND).https://creativecommons.org/licenses/by/4.0/ Sands Limited v. Director General of Customs, highlighting the need for clear and consistent application of these rules [29]. Comparative Analysis A comparative analysis of the domestic legal barriers to implementing the “Indo-Sri Lanka Free Trade Agreement (ISFTA) in both India and Sri Lanka reveals intriguing parallels and divergences, stemming from their unique legal, political, and economic landscapes. This analysis provides valuable insights into the challenges faced by both nations in harmonising their domestic legal frameworks with international trade commitments [30]. One striking contrast lies in the constitutional structures of the two countries. India's federal system creates a complex interplay between “central and state authorities” in implementing the ISFTA. “The division of powers outlined in the Seventh Schedule of the Indian Constitution often leads to jurisdictional ambiguities, particularly in areas where trade intersects with state subjects [31]. Sri Lanka, with its unitary system of government, faces different challenges. While decision-making is more centralised, the strong executive presidency and the need for parliamentary approval can create tensions in the treaty implementation process [32]. Both countries grapple with the doctrine of separation of powers, albeit in different ways. In India, the Supreme Court has played a crucial role in interpreting the relationship between international agreements and domestic law, as seen in cases like “State of West Bengal v. Union of India. Similarly, the Sri Lankan Supreme Court, in decisions like S.C. Reference No. 2/2003, has emphasised the need for legislative oversight in implementing international agreements. These judicial interventions highlight the ongoing dialogue between the executive's treaty-making powers and the legislature's role in domestic law-making in both nations [33]. Statutory obstacles present significant challenges in both countries. “India's Foreign Trade (Development and Regulation) Act, 1992, and Sri Lanka's Imports and Exports (Control) Act, No. 1 of 1969, are examples of pre-existing legislation that may conflict with ISFTA provisions. The process of amending these laws to align with the agreement's requirements is often time-consuming and politically sensitive in both countries, reflecting the delicate balance between international commitments and domestic economic interests [34]. Administrative hurdles, while present in both nations, manifest differently. India's challenge lies in coordinating between multiple agencies across the central and state levels. Sri Lanka, despite its more centralised system, faces issues of overlapping jurisdictions and inconsistent regulations among various government bodies. Both countries struggle with bureaucratic inefficiencies that hinder the smooth implementation of the ISFTA. The interpretation and application of the Rules of Origin (ROO) pose challenges in both jurisdictions. Indian courts have dealt with ROO-related disputes in cases like Commissioner of Customs, Vishakhapatnam v. Aggarwal Industries Ltd., while Sri Lankan courts have addressed similar issues in cases such as Lanka Mineral Sands Limited v. Director General of Customs. These legal precedents underscore the complexity of applying ROO provisions and the need for consistent interpretation in both countries [35]. Potential Solutions and Recommendations In addressing the domestic legal barriers to implementing the “Indo-Sri Lanka Free Trade Agreement (ISFTA)”, a range of potential solutions and recommendations emerge. These proposals aim to harmonise domestic legal frameworks with international trade commitments, streamline administrative processes, and enhance the overall efficacy of the agreement [36]. Firstly, both India and Sri Lanka should consider comprehensive legislative reviews to identify and amend laws that conflict with ISFTA provisions. This process could involve creating specialised committees comprising legal experts, trade officials, and industry representatives to thoroughly examine existing statutes and propose necessary amendments. In India, for instance, the Foreign Trade (Development and Regulation) Act, 1992, might require modifications to align with ISFTA commitments [37]. Secondly, establishing a robust mechanism for intergovernmental coordination is crucial. In India's federal structure, this could involve creating a permanent forum for dialogue between central and state governments on ISFTA implementation. Sri Lanka, despite its unitary system, could benefit from improved coordination among various ministries and agencies involved in trade matters. Such mechanisms could help resolve jurisdictional conflicts and ensure consistent policy implementation. Thirdly, both countries should consider developing clear guidelines for the interpretation and application of the Rules of Origin (ROO) provisions. These guidelines should be formulated in consultation with legal experts, customs officials, and industry stakeholders to ensure practicality and consistency. Regular training programs for customs officials on these guidelines could significantly reduce disputes and enhance predictability for traders [38]. Fourthly, the establishment of specialised trade courts or tribunals in both countries could expedite the resolution of ISFTA-related disputes. These courts, staffed by judges with expertise in international trade law, could provide faster and more consistent rulings on issues such as ROO disputes, safeguard measures, and other technical aspects of the agreement. “The success of specialised environmental courts in India, as seen in cases like Indian Council for Enviro-Legal Action v. Union of India, provides a precedent for such an approach” [39]. Fifthly, enhancing the transparency and accessibility of traderelated information is crucial. Both countries should invest in developing comprehensive online platforms that provide up-to- DRA ANNUAL INTERNATIONAL CONFERENCE 2024 ON “SOCIO-ECONOMIC TRANSFORMATION: OPPORTUNITIES AND CHALLENGES” Int. Jr. of Contemp. Res. in Multi. PEER-REVIEWED JOURNAL Volume 4 [Special Issue 1] Year 2025 79 © 2025 Meenakshi Yadav, Amisha Singh. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY NC ND).https://creativecommons.org/licenses/by/4.0/ date information on ISFTA provisions, customs procedures, and relevant domestic regulations. These platforms could also offer guidance on compliance with trade rules, helping businesses, especially SMEs, to navigate the complexities of bilateral trade. CONCLUSION In concluding this comprehensive analysis of the domestic legal barriers to implementing “the Indo-Sri Lanka Free Trade Agreement (ISFTA)”, it becomes evident that the challenges are multifaceted and deeply rooted in the legal, political, and economic structures of both nations. The ISFTA, while holding significant potential for enhancing bilateral trade and economic cooperation, has encountered substantial hurdles in its implementation due to these domestic legal barriers [40]. The research has illuminated the complex interplay between international trade commitments and national legal frameworks. In India, the federal structure creates unique challenges, with the division of powers “between the central and state governments” often leading to jurisdictional ambiguities in implementing ISFTA provisions. “The Supreme Court of India's rulings, such as in State of West Bengal v. Union of India, have highlighted the delicate balance required in navigating these federal complexities in the context of international agreements [41]. Sri Lanka, despite its unitary system of government, faces its own set of challenges. The strong executive presidency and the need for parliamentary approval in treaty implementation create a different but equally complex landscape. The Sri Lankan judiciary, as seen in cases like S.C. Reference No. 2/2003, has emphasised the importance of legislative oversight in the implementation of international agreements, adding another layer of complexity to the process [42]. Both countries grapple with statutory obstacles, where existing laws often conflict with ISFTA provisions. The process of amending these laws to align with the agreement's requirements has proven to be time-consuming and politically sensitive. This legal inertia has significantly impeded the full realisation of the ISFTA's potential benefits. Administrative hurdles and bureaucratic inefficiencies in both nations have further complicated the implementation process. The multiplicity of agencies involved in trade-related matters, each with its own set of rules and procedures, has created a labyrinthine process for businesses to navigate. This complexity not only discourages trade but also increases transaction costs, diminishing the competitiveness of goods traded under the ISFTA [43]. The interpretation and application of Rules of Origin (ROO) have emerged as a particularly thorny issue. Legal disputes in both countries, such as Commissioner of Customs, Vishakhapatnam v. Aggarwal Industries Ltd. in India and Lanka Mineral Sands Limited v. Director General of Customs in Sri Lanka, underscore the complexities involved in applying these rules consistently [44]. Moreover, the research has revealed a persistent tension between the liberalisation goals of the ISFTA and domestic economic priorities, particularly the protection of certain industries. This conflict often results in the invocation of safeguard measures that, while legally permissible, can undermine the spirit of free trade embodied in the agreement. REFERENCES 1. Kelegama S. India-Sri Lanka Free Trade Agreement. New Delhi: SAGE Publications India; 2014. 2. Ministry of Commerce and Industry, Government of India. India-Sri Lanka Free Trade Agreement. 2018. Available from: https://commerce.gov.in/international-trade/tradeagreements/india-sri-lanka-free-trade-agreement/ (accessed 2024 Sep 25). 3. Weerakoon D. Indo-Sri Lanka Free Trade Agreement: How free is it? Economic and Political Weekly. 2001;36:627-629. 4. Asian Development Bank. South Asia Subregional Economic Cooperation: Trade Facilitation Strategic Framework 2014-2018. 2015. 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