The Government of India will enter into Comprehensive Economic Partnership Agreement (CEPA) with Sri Lanka on the sidelines of the South Asian Association for Regional Corporation (SAARC) summit in Colombo next month.

The agreement is the first of its kind that India is signing with a SAARC member country.

Discussions with regard to the finalizing of the deal were held between the Secretary of the Indian Ministry of Commerce and Industry Gopal K. Pillai and Minister of Investment Promotion G.L. Peiris.

Mr. Pillai speaking to media in Colombo said that this would be the second such agreement by India, following one signed with Singapore in 2005.

"It is a good overall agreement in line with our engagement with the neighbouring countries. It will be fully operational in three years," said Pillai.

He added that CEPA covers trade in the areas of goods, services, education and customs cooperation. India signed the Free Trade Agreement with Sri Lanka in 1999.

As a result Sri Lanka's volume of trade with India increased from US$ 49 million to US$ 516 million. India's trade volume with Sri Lanka increased from US$ 549 million to US$ 2.7 billion between 1999 and 2007.

The Agreement is expected to augment Sri Lanka's trade volume to US$ 1.5 billion dollars by 2012.

A decision to set up a Joint Study Group for making recommendations for CEPA was first announced in April 2003 following which the report was submitted for perusal and ratification by the two parties in October 2003.