Military

DATE=10/21/03

TYPE=CORRESPONDENT REPORT

NUMBER=2-308874

TITLE=INDIA/SRI LANKA (L-ONLY)

BYLINE=ANJANA PASRICHA

DATELINE=

CONTENT=

VOICED AT:

/// EDITORS: SRI LANKAN PM LEAVES INDIA APPROX 18.30 GMT///

INTRO: Sri Lanka and India have agreed to strengthen economic cooperation, and step-up bilateral ties. Anjana Pasricha reports from New Delhi, Sri Lankan Prime Minister Ranil Wickremesing is wrapping up a two-day visit to India.

TEXT: After a series of meetings between Mr. Wickremesinghe and top Indian leaders, both countries decided to speed up negotiations on a new economic partnership pact.

The agreement will help Sri Lanka bridge its huge trade deficit with India, and increase Indian investment in the island nation.

Trade between the two countries has risen dramatically since they signed a free-trade deal five years ago. The new

agreement is expected to further boost economic ties.

Indian foreign ministry spokesman Navtej Sarna says the Comprehensive Economic Partnership Agreement will be

concluded by next March.

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The trade issues figured prominently. India is today the third largest cumulative investor of Sri Lanka with total approved investments of about 392 million dollars. There is also considerable scope in the services sector, particularly tourism.

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The talks also focused on the peace process in Sri Lanka, where the government and Tamil Tiger rebels began a dialogue last year to end a two-decade long struggle for a separate Tamil homeland.

The peace talks with Tamil Tiger rebels have been deadlocked since April, but the rebels said on Monday they are willing to re-enter direct negotiations with the government "any time".

Mr. Wicremesignhe told an Indian news agency (United News of India) he is optimistic about the positive outcome of the peace process, but the next five to six months will be crucial in finding a political solution.

The Sri Lankan leader told Indian leaders he is awaiting a rebel response to his government's offer to establish an interim administration in Tamil-dominated areas.

The Tamil Tigers say they will present a power-sharing proposal to the government by the end of the month.

After a meeting Mr. Wickremesinghe, Indian Deputy Prime Minister Lal Krishna Advani said (Monday) India supports the peace process and wants to see further progress. He says New Delhi favors the devolution of powers to the guerrillas, but wants Sri Lanka's unity to be maintained.

Sri Lanka's efforts to end the ethnic conflict have won widespread support from the international community. (signed)

NEB/HK/MEM