The trade between the two countries remains at negligible level at present. Sri Lanka and Nepal had signed a Trade Agreement in 1979 and naturally it is now outdated with the fast changes that have taken place in global and regional trade and investment regimes. In 1999 Nepal’s Foreign Minister Hon. Ram Sharan Mahat and Sri Lankan Foreign Minister Hon. Lakshman Kadirgamar signed an agreement on Avoidance of double taxation in the area of Trade and Investment.
Sri Lanka’s trade with Nepal is marginal by any standard. There are severe constraints to expand trade between the two countries basically due to high cost of transportation and trade treaty signed between India and Nepal which gives the two countries duty free access to each others markets. Further Nepal is a landlocked country and her imports are mainly from India, China and Bangladesh overland.
Trade, Investment and Tourism
The scope for Sri Lanka- Nepal joint ventures in the service sector such as hotel and tourism industries is no doubt promising. Promoting tourism between Sri Lanka and Nepal is intertwined with the linking two capitals. Sri Lanka known as a pearl of Indian Ocean and Nepal, the land of Mount Everest, the highest peak in the world, could benefit mutually from cooperation in the tourism sector by linking Kathmandu and Colombo by air. What is important is to promote both the destinations jointly. In this connection the signing of the Air Service Agreement between Sri Lanka and Nepal can be treated as a landmark. Nepal has world heritage sites apart from Himalayan tranquility. Lumbini would be the foremost interest to Sri Lanka. Lack of Air connectivity between the two capitals is a barrier to promote tourism.
Analyzing the Sri Lankan tourists who visit Nepal yearly the largest number, are pilgrims. Majority of them arrive via surface road and stayed only a half a day in Lumbini as Indian tour operators take them back on the same day after their visit to Lumbini.