EDB Consults EU Officials on EU–India FTA Impact on Sri Lanka Exports 📈

The Sri Lanka Export Development Board (EDB) met with European Commission consultants Paul Baker and Talal Rafi to discuss the implications of the landmark EU–India Free Trade Agreement (FTA) on Sri Lanka’s export economy. Concluded on January 27, 2026, the FTA will grant Indian goods substantial tariff liberalisation and duty-free access to the EU market upon entering into force. • Strategic Market Context: The EU is Sri Lanka’s 2nd largest export destination (after the US), accounting for ~24% of total merchandise exports. Sri Lankan exports to key EU markets (Germany, Italy, Netherlands, France, Belgium) recorded strong growth in 2025. • Threats & Sectoral Impacts: Tariff eliminations under the FTA will significantly boost the price competitiveness of Indian exports in Europe, posing major challenges to local sectors: • Apparel & textiles (JAAF expressed heavy concern over strict rules of origin and regional cumulation restrictions on Indian-sourced fabric under GSP+) • Leather and footwear • Gems & jewellery • Marine products, plastics & rubber, chemicals, sports goods, and toys • Strategic Response & Mitigation: • GSP+ Protection: EDB emphasised maintaining Sri Lanka's preferential access under the revised EU GSP+ scheme to offset Indian price advantages. • Regional Cumulation: Sri Lankan authorities will engage the EU to secure favorable regional cumulation arrangements for Indian raw materials. • Value Addition & Standards: Exporters are urged to transition toward high-value, differentiated goods while strictly aligning with EU sustainability, environmental, and traceability compliance standards.